What Liens or Encumbrances Survive Against a Property After it is Sold at a Tax Deed Sale?
By Susan P. Bakalar, Esq., Florida Bar Board Certified in Condominium & Planned Unit Development Law.
Governmental liens and judgments survive the issuance of a tax deed sale and are satisfied to the fullest extent possible with any overbid monies (also known as surplus funds) from the tax sale. Governmental liens not satisfied in full, survive and remain against the property. Anyone interested in knowing what liens are “of record” may research the Ownership and Encumbrance Report filed in each tax deed file and will reveal any liens. The Clerk’s office is not responsible for any discrepancies or omissions on the report.
Florida Statute 197.552 states, “Except as specifically provided in this chapter, no right, interest, restriction, or other covenant shall survive the issuance of a tax deed, except that a lien of record held by a municipal or county governmental unit, special district, or community development district, when such lien is not satisfied as of the disbursement of proceeds of sale under the provisions of s. 197.582, shall survive the issuance of a tax deed.”
The full text of the 2020 version of Chapter 197.552 and 197.582 of the Florida Statutes is shown below and is shown to make the reader aware of the intricacies related to Tax Deeds;
197.552 Tax deeds.—
All tax deeds shall be issued in the name of a county and shall be signed by the clerk of the county. The deed shall be witnessed by two witnesses, the official seal shall be attached thereto, and the deed shall be acknowledged or proven as other deeds. Except as specifically provided in this chapter, no right, interest, restriction, or other covenant shall survive the issuance of a tax deed, except that a lien of record held by a municipal or county governmental unit, special district, or community development district, when such lien is not satisfied as of the disbursement of proceeds of sale under the provisions of s. 197.582, shall survive the issuance of a tax deed. The charges by the clerk shall be as provided in s. 28.24. Tax deeds issued to a purchaser of land for delinquent taxes shall be in the form prescribed by the department. All deeds issued pursuant to this section shall be prima facie evidence of the regularity of all proceedings from the valuation of the lands to the issuance of the deed, inclusive.
History.—s. 1, ch. 72-268; s. 21, ch. 73-332; s. 1, ch. 79-334; s. 192, ch. 85-342; s. 14, ch. 2002-18.
Note.—Former s. 197.271.
197.582 Disbursement of proceeds of sale.—
(1) If the property is purchased by any person other than the certificate holder, the clerk shall forthwith pay to the certificate holder all of the sums he or she has paid, including the amount required for the redemption of the certificate or certificates together with any and all subsequent unpaid taxes plus the costs and expenses of the application for deed, with interest on the total of such sums for the period running from the month after the date of application for the deed through the month of sale at the rate of 1.5 percent per month. The clerk shall distribute the amount required to redeem the certificate or certificates and the amount required for the redemption of other tax certificates on the same land with omitted taxes and with all costs, plus interest thereon at the rate of 1.5 percent per month for the period running from the month after the date of application for the deed through the month of sale, in the same manner as he or she distributes money received for the redemption of tax certificates owned by the county.
(2)(a) If the property is purchased for an amount in excess of the statutory bid of the certificate holder, the surplus must be paid over and disbursed by the clerk as set forth in subsections (3), (5), and (6). If the opening bid included the homestead assessment pursuant to s. 197.502(6)(c), that amount must be treated as surplus and distributed in the same manner. The clerk shall distribute the surplus to the governmental units for the payment of any lien of record held by a governmental unit against the property, including any tax certificates not incorporated in the tax deed application and omitted taxes, if any. If there remains a balance of undistributed funds, the balance must be retained by the clerk for the benefit of persons described in s. 197.522(1)(a), except those persons described in s. 197.502(4)(h), as their interests may appear. The clerk shall mail notices to such persons notifying them of the funds held for their benefit at the addresses provided in s. 197.502(4). Such notice constitutes compliance with the requirements of s. 717.117(4). Any service charges and costs of mailing notices shall be paid out of the excess balance held by the clerk. Notice must be provided in substantially the following form:
NOTICE OF SURPLUS FUNDS FROM TAX DEED SALE
CLERK OF COURT
Tax Deed #
Pursuant to chapter 197, Florida Statutes, the above property was sold at public sale on (date of sale) , and a surplus of $ (amount) (subject to change) will be held by this office for 120 days beginning on the date of this notice to benefit the persons having an interest in this property as described in section 197.502(4), Florida Statutes, as their interests may appear (except for those persons described in section 197.502(4)(h), Florida Statutes).
To the extent possible, these funds will be used to satisfy in full each claimant with a senior mortgage or lien in the property before distribution of any funds to any junior mortgage or lien claimant or to the former property owner. To be considered for funds when they are distributed, you must file a notarized statement of claim with this office within 120 days of this notice. If you are a lienholder, your claim must include the particulars of your lien and the amounts currently due. Any lienholder claim that is not filed within the 120-day deadline is barred.
A copy of this notice must be attached to your statement of claim. After the office examines the filed claim statements, it will notify you if you are entitled to any payment.
Clerk of Court
(b) The mailed notice must include a form for making a claim under subsection (3). Service charges at the rate set forth in s. 28.24(10) and the costs of mailing must be paid out of the surplus funds held by the clerk. If the clerk or comptroller certifies that the surplus funds are not sufficient to cover the service charges and mailing costs, the clerk shall receive the total amount of surplus funds as a service charge. For purposes of identifying unclaimed property pursuant to s. 717.113, excess proceeds shall be presumed payable or distributable on the date the notice is sent.
(3) A person receiving the notice under subsection (2) has 120 days from the date of the notice to file a written claim with the clerk for the surplus proceeds. A claim in substantially the following form is deemed sufficient:
CLAIM TO RECEIVE SURPLUS PROCEEDS OF A TAX DEED SALE
Complete and return to:
Note: The Clerk of the Court must pay all valid liens before distributing surplus funds to a titleholder.
Contact name, if applicable:
Telephone Number: Email Address:
Date of sale (if known):
I am not making a claim and waive any claim I might have to the surplus funds on this tax deed sale.
I claim surplus proceeds resulting from the above tax deed sale.
I am a (check one) Lienholder; Titleholder.
(1) LIENHOLDER INFORMATION (Complete if claim is based on a lien against the sold property).
(a) Type of Lien: Mortgage; Court Judgment; Other
Describe in detail:
If your lien is recorded in the county’s official records, list the following, if known:
Recording date: ; Instrument #: ; Book #: ; Page #: .
(b) Original amount of lien: $
(c) Amounts due: $
- Principal remaining due: $
- Interest due: $
- Fees and costs due, including late fees: $ (describe costs in detail, include additional sheet if needed).
- Attorney fees: $ (provide amount claimed): $
(2) TITLEHOLDER INFORMATION (Complete if claim is based on title formerly held on sold property.)
(a) Nature of title (check one): Deed; Court Judgment; Other (describe in detail) .
(b) If your former title is recorded in the county’s official records, list the following, if known:
Recording date: ; Instrument #: ; Book #: ; Page #: .
(c) Amount of surplus tax deed sale proceeds claimed: $
(d) Does the titleholder claim the subject property was homestead property? Yes No.
(3) I hereby swear or affirm that all of the above information is true and correct.
STATE OF FLORIDA
Sworn to or affirmed and signed before me on (date) by (name of affiant) .
NOTARY PUBLIC or DEPUTY CLERK
(Print, Type, or Stamp Commissioned Name of Notary)
Personally Known, or
(4) A claim may be:
(a) Mailed using the United States Postal Service. The filing date is the postmark on the mailed claim;
(b) Delivered using either a commercial delivery service or in person. The filing date is the day of delivery; or
(c) Sent by fax or e-mail, as authorized by the clerk. The filing date is the date the clerk receives the fax or e-mail.
(5) Except for claims by a property owner, claims that are not filed on or before close of business on the 120th day after the date of the mailed notice as required by subsection (2), are barred. A person, other than the property owner, who fails to file a proper and timely claim is barred from receiving any disbursement of the surplus funds. The failure of any person described in s. 197.502(4), other than the property owner, to file a claim for surplus funds within the 120 days constitutes a waiver of interest in the surplus funds, and all claims thereto are forever barred.
(6) Within 90 days after the claim period expires, the clerk may either file an interpleader action in circuit court, if potentially conflicting claims to the funds exist, or pay the surplus funds according to the clerk’s determination of the priority of claims using the information provided by the claimants under subsection (3). Fees and costs incurred by the clerk in determining whether an interpleader action should be filed shall be paid from the surplus funds. If the clerk files an interpleader action, the court shall determine the distribution of funds based upon the priority of liens filed. The clerk may move the court to award reasonable fees and costs from the interpleaded funds. An action to require payment of surplus funds is not ripe until the claim and review periods expire. The failure of a person described in s. 197.502(4), other than the property owner, to file a claim for surplus funds within the 120 days constitutes a waiver of all interest in the surplus funds, and all claims for them are forever barred.
(7) A holder of a recorded governmental lien, other than a federal government lien or ad valorem tax lien, must file a request for disbursement of surplus funds within 120 days after the mailing of the notice of surplus funds. The clerk or comptroller must disburse payments to each governmental unit to pay any lien of record held by a governmental unit against the property, including any tax certificate not incorporated in the tax deed application and any omitted taxes, before disbursing the surplus funds to nongovernmental claimants.
(8) The tax deed recipient may directly pay off all liens to governmental units that could otherwise have been requested from surplus funds, and, upon filing a timely claim under subsection (3) with proof of payment, the tax deed recipient may receive the same amount of funds from the surplus funds for all amounts paid to each governmental unit in the same priority as the original lienholder.
(9) If the clerk does not receive claims for surplus funds within the 120-day claim period, as required in subsection (5), there is a conclusive presumption that the legal titleholder of record described in s. 197.502(4)(a) is entitled to the surplus funds. The clerk must process the surplus funds in the manner provided in chapter 717, regardless of whether the legal titleholder is a resident of the state or not.
History.—s. 8, ch. 17457, 1935; CGL 1936 Supp. 999(143); s. 31, ch. 20722, 1941; ss. 1, 2, ch. 69-55; s. 1, ch. 72-268; ss. 22, 34, ch. 73-332; s. 4, ch. 77-354; s. 3, ch. 79-334; s. 6, ch. 81-284; s. 6, ch. 82-205; s. 196, ch. 85-342; s. 1030, ch. 95-147; s. 10, ch. 96-397; s. 2, ch. 2003-284; s. 90, ch. 2003-402; s. 51, ch. 2011-151; s. 8, ch. 2014-211; s. 3, ch. 2018-160.
Note.—Former ss. 194.22, 197.535, 197.291.
For Assistance with Tax Deed and Quiet Title Actions, please call the Law Offices of Bakalar & Associates, PA at 954-475-4244 or send your email request to email@example.com.