How Mortgages, Code Enforcement Liens, and Judgments Affect Florida…

Short answer

If your property was sold at a Florida tax deed sale, mortgages, code enforcement liens, and judgment liens can affect whether you receive any surplus funds. The surplus is the amount the property sold for above the unpaid taxes and the costs of the sale. For homestead property, the opening bid also includes one-half of the assessed value, and that amount is part of the surplus too. The clerk of court pays governmental liens first, then other lienholders in order of priority, and finally the former owner. A sworn claim must be filed with the clerk within 120 days of the notice of surplus funds.

Why it matters

Understanding how mortgages, code enforcement liens, and judgments affect the Florida tax deed surplus is crucial because it determines if you, as the former owner, will receive any money after losing your property for unpaid taxes. Key impacts include:

Financial recovery: The surplus may be the only chance to recover any value from your lost property.
Lien priority: Governmental liens (such as code enforcement fines) are paid before other liens or the former owner, which can reduce or eliminate the amount you might receive.
Timing: Missing the 120-day claim window can bar lienholders from payment, but not the former owner.
Complexity: Multiple liens and conflicting claims can delay or complicate the distribution of surplus funds.

For example, if your property had a code enforcement lien and a mortgage, both could be paid from the surplus before any funds are distributed to you.

Steps

If you are the former owner of a property sold at a Florida tax deed sale and want to understand or claim surplus funds:

Confirm the type of sale: Make sure the sale was a tax deed sale (not a mortgage foreclosure). A tax deed sale happens when property taxes go unpaid, the holder of a tax certificate applies for a tax deed, and the clerk of the circuit court sells the property at public auction. Understand what the surplus is: The surplus is the amount the property sold for above the unpaid taxes and the costs of the sale. For homestead property, the opening bid also includes one-half of the assessed value, and that amount is part of the surplus too. The surplus is held by the clerk of court. Review liens and judgments: Identify any governmental liens (such as code enforcement liens) on the property. Check for mortgages and judgment liens recorded against the property. Wait for notice: The clerk of court will mail a notice of surplus funds after the sale. File a claim: File a sworn written claim with the clerk of court within 120 days of the date of the notice. Lienholders who do not file within 120 days are barred from payment. This bar does not apply to the property owner. Distribution order: The clerk pays governmental liens first. Next, other lienholders are paid in order of priority (senior before junior). Any remaining surplus is paid to the former owner (the titleholder of record). Conflicting claims: If there are disputes, the clerk may ask the circuit court to decide who is paid, in a process called interpleader. Unclaimed surplus: If no claim is filed within 120 days, the titleholder of record is presumed entitled and the funds are handled under Florida’s unclaimed property law. The firm also represents former owners, and the beneficiaries of owners who have died, in claims for surplus that has been sent to the Florida Department of Financial Services.

Example

Example scenario:

Suppose your homestead property was sold at a tax deed sale for $120,000. The unpaid property taxes and sale costs totaled $10,000. The assessed value of your home was $80,000.

The opening bid included the $10,000 in unpaid taxes and costs, plus one-half of the assessed value ($40,000), for a total of $50,000.
The property sold for $120,000, so the surplus is $70,000 ($120,000 sale price minus $50,000 opening bid).
There is a $15,000 code enforcement lien (governmental), a $30,000 mortgage, and a $5,000 judgment lien.
The clerk of court will pay the $15,000 code enforcement lien first, then the $30,000 mortgage, then the $5,000 judgment lien. If anything remains, it goes to you as the former owner.

Key Point: Governmental liens, such as code enforcement fines, are paid before mortgages and other liens. The former owner only receives surplus funds if any remain after all valid liens are paid.

Common pitfalls

Confusing tax deed sales with mortgage foreclosures: The rules for surplus distribution are different. Tax deed sales are triggered by unpaid property taxes, not mortgage defaults.
Overlooking governmental liens: Code enforcement liens and other governmental liens are paid first and can consume the entire surplus.
Missing the 120-day deadline: Lienholders who do not file a claim with the clerk within 120 days of the notice are barred from payment. This does not apply to the former owner.
Assuming all surplus goes to the former owner: Other liens may reduce or eliminate the amount you receive.
Not reviewing the property’s lien history: Failing to identify all liens can lead to surprises in the distribution process.
Believing a lawyer is required to file a claim: The former owner can file a claim directly with the clerk of court.

Summary

The surplus from a Florida tax deed sale is the amount the property sold for above the unpaid taxes and sale costs. For homestead property, one-half of the assessed value is included in the opening bid and is part of the surplus too.
The clerk of court pays governmental liens first, then other lienholders in order of priority, and finally the former owner.
A sworn claim must be filed with the clerk within 120 days of the notice of surplus funds. Lienholders are barred if they miss this deadline, but the former owner is not.
Review all liens and judgments on your property to understand your chances of receiving surplus funds.
Next steps: Gather your property records, review any liens, and be ready to respond promptly when you receive a notice of surplus funds from the clerk of court.

This page provides general information and does not create an attorney-client relationship.

Important information

Attorney advertising. Responsible attorney: Christian Cruz, Esq. Office: CRUZ LAW FIRM, 160 W Camino Real, 589, Boca Raton, FL, 33432.

Florida law does not require you to hire a lawyer or anyone else to claim tax deed surplus funds. A former owner may file a claim with the clerk of court directly.

This page is general information about Florida law, not legal advice. Reading it does not create an attorney-client relationship, and no such relationship is formed until we have a signed written agreement.

Fee arrangements depend on the posture of the matter and are set out in a written agreement before any work begins. We are glad to explain how fees would work in your situation when we speak.

FAQ

What is a Florida tax deed surplus?

The surplus is the amount the property sold for above the unpaid taxes and the costs of the sale. For homestead property, the opening bid also includes one-half of the assessed value, and that amount is part of the surplus too.

Who gets paid from the surplus after a tax deed sale?

The clerk of court pays governmental liens first, then other lienholders in order of priority, and finally the former owner (the titleholder of record).

How long do I have to file a claim for surplus funds?

A sworn written claim must be filed with the clerk of court within 120 days of the date of the notice of surplus funds. Lienholders who do not file within that time are barred, but this does not apply to the property owner.

What happens if there are conflicting claims to the surplus?

If there are conflicting claims, the clerk may ask the circuit court to decide who is paid, in a process called interpleader.

What if no claim is filed within 120 days?

If no claim is filed within 120 days, the titleholder of record is presumed entitled and the funds are handled under Florida’s unclaimed property law.