Foreclosure Sale Purchases in Florida

Prepare for the Worst, Be Pleasantly Surprised: Foreclosure Sale Purchases in Florida

It is always better to prepare for the worst and be pleasantly surprised with a new listing. However, before you tender a foreclosure sale auction bid, realtors should advise their clients to conduct a healthy dose of legal due diligence. Why? Because not all prospective purchasers can afford to take a significant and/or total loss on a foreclosure sale winning bid purchase. Such failure may affect the property’s marketability or delay a future sale in this hot market. Often, auction participants perform price, value, and location due diligence on real property; however, many fail to perform the basic legal due diligence required to evaluate the risk/reward of the property’s subsequent listing and sale to a future buyer.

Why is performing “legal due diligence” before a foreclosure property auction important?

A winning bidder is not guaranteed to take the property free and clear of other third-party interests, and the new title owner may not have a clear title to sell the real property. For example, the property’s foreclosure action may have resulted from a second-position lienholder. Florida law does not require the first-position lienholder to be included in the foreclosure lawsuit. The new title owner has just purchased a foreclosure sale property subject to a large mortgage lien that might dwarf the initial investment by tens or hundreds of thousands of dollars!

What steps to take to protect yourself?

  1. A prospective purchaser and future seller should always order a title search report and municipal lien search to determine what encumbrances are present on the auction parcel. This report will also help identify certain liens and other encumbrances that may be extinguished by the foreclosure sale and which lien and encumbrances will survive the foreclosure sale. Additionally, these searches will identify if the real property is subject to any code enforcement violations or tax liens. If any governmental, statutory, municipal liens encumber title to the property, the interested party should consult with an attorney before any sale auction bid.
  2. Secondly, is the real property associated with a homeowner’s association or a condominium association? Contact the real property’s association and determine if the prior title owner is current with his association dues and special assessments. In Florida, a new title owner is jointly and severally liable for fees and assessments with the old title owner. Past due assessments and special assessments are expensive, and by law, associations must charge each of their unit owners the same for these costs, so an auction owner must have the funds to pay these when due. An association cannot “waive” these fees for a new title owner even if the costs and assessments were assessed first to the old title owner.
  3. Many auction participants fail to realize your local Clerk of Court does not “warrant” or “guarantee” a foreclosure sale. Suppose an interested party was omitted or improperly served in the litigation, and the certificate of title is issued. In that case, the interested party may retain rights to the property and cloud the new title owner’s marketable title. The safest route for a smooth future sale of distressed property is to advise clients to request a title search and commitment before the auction. Title insurance could be issued after the expiration of the property’s redemption period and issuance of its certificate of title. Title insurance exists for a reason and may assist if an impediment is raised in the property’s future listing and sale.

Best practices for foreclosure sales? Hire an attorney!

Remember, to err is human, and once the total amount is deposited into the clerk of court and the certificate of title is issued, an auction winner cannot unwind the sale. Suppose your clients and future sellers cannot afford to lose their initial investment funds, pay unexpected association assessments, or incur tens of thousands of dollars in quiet title litigation to effectuate a closing. In that case, we recommend that an auction sale participant retain a licensed Florida counsel to procure title searches and review the foreclosure sale court docket before any bids. Ultimately, the above is not an exhaustive list. If you or your clients/sellers want to participate in a Florida foreclosure auction or sheriff’s sale, it is highly recommended that a local real estate attorney be consulted several weeks before any auction to avoid unwanted and costly mistakes.


Michael E. Schuchat,

Michael has been practicing in the areas of civil litigation, creditor bankruptcy, real estate, and personal injury since 2010. He has a wide range of civil litigation experience, which includes contract disputes, real property disputes, landlord-tenant litigation, residential and commercial foreclosure, plaintiff personal injury cases, premises liability, slip & fall, dog bite and motor vehicle accident litigation.

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