How Florida Courts Prioritize Surplus Fund Claims Between Owners, Heirs, and Creditors

How Florida Courts Prioritize Surplus Fund Claims Between Owners, Heirs, and Creditors

When a property is sold at a foreclosure or tax deed auction in Florida, it may generate surplus funds — the money left over after all debts (mortgage balances, tax bills, court costs) are paid. But what happens when multiple parties file a claim for those funds?

This is where Florida courts step in to determine who gets paid — and in what order. Whether you’re a former homeowner, an heir, or a creditor, understanding the legal hierarchy of surplus fund claims is critical to protecting your interest.

What Are Surplus Funds? (Quick Refresher)

• In a foreclosure, surplus funds are the money left after the mortgage and legal fees are paid.

• In a tax deed sale, surplus funds are what's left after delinquent property taxes and related costs are covered.

These funds don’t automatically go to the former owner. The court reviews all claims and distributes the funds according to Florida law.

The Legal Hierarchy of Surplus Fund Claims in Florida

Florida statutes — specifically § 45.032 (foreclosures) and § 197.582 (tax deeds) — outline the order in which surplus funds are distributed.

Here’s how courts prioritize claims:

1. Lienholders with Recorded Judgments

If a creditor had a properly recorded lien (such as a second mortgage, judgment, or HOA lien) before the foreclosure judgment or tax deed sale, they usually get paid first — in the order of lien priority.

• The court will examine public records to confirm when each lien was recorded.

• Lienholders must file a claim within the statutory time period, or they risk losing their right to the funds.

2. The Owner of Record at the Time of the Sale

Once lienholders are paid (or if there are none), the remaining surplus typically belongs to the owner of record — the person whose name was on the deed at the time of the final judgment or tax deed issuance.

This person must still file a valid claim and prove their identity and connection to the property.

3. Heirs or Estate Representatives (If the Owner Is Deceased)

If the former owner is deceased, the legal heirs or a personal representative of the estate can claim the funds — but only after the court confirms:

• Probate has been properly opened

• Heirship is legally established (with a will or through intestate succession)

• There are no competing estate claims

This process often requires court filings, legal notices, and Letters of Administration.

4. Assignees and Surplus Recovery Professionals

If the former owner signed over their rights to someone else (known as an assignee), the court may approve the claim — as long as the assignment is:

• Properly signed and notarized

• Filed in accordance with court rules

• Not found to be predatory or abusive (especially if the fee exceeds the 12% cap)

Courts may reject improper assignments, especially those that violate Florida’s consumer protection statutes.

5. Claims Filed After Statutory Deadlines

Some claimants miss the window to file, especially in tax deed cases, where Florida law gives only 120 days to file a claim. If no one files in time, the funds are transferred to the Florida Department of Financial Services as unclaimed property.

At that point, you can still apply through the state — but the process is slower, and your legal standing may be weaker.

How Judges Evaluate Competing Claims

When multiple claims exist, judges review:

• The type and priority of each lien

• Whether the ownership or heirship is clearly documented

• Whether any claims were filed after the deadline

• The validity of any assignments or powers of attorney

Judges aim to distribute the funds fairly, based on legal standing — not emotions, hardship, or personal stories.

Why Legal Guidance Matters

If you're not sure where you stand in the hierarchy — or if you're competing with other claimants — it's critical to have professional help.

At Visionary Surplus Recovery, we:

• Identify your legal standing

• Prepare your paperwork correctly

• Partner with attorneys to defend your claim if needed

• Help protect your rights in contested or time-sensitive cases

Worried You’ll Miss Out on Surplus Funds?

Whether you’re a former owner, an heir, or a creditor — we’ll help determine your claim’s strength and walk you through the process.

Disclaimer: This blog is for informational purposes only and does not constitute legal advice. For formal legal counsel, please consult a licensed Florida attorney.