GENERAL BANK, F.S.B., F/K/A GENERAL FEDERAL SAVINGS AND LOAN ASSOCIATION OF MIAMI, APPELLANT,
v.
WESTBROOKE POINTE, INC., APPELLEE
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General Bank appeals the trial court's award of surplus foreclosure proceeds to the mortgagor Westbrooke Pointe rather than to General Bank as third mortgagee. The court holds that under Florida law, junior lienholders have priority over the mortgagor to surplus proceeds from a foreclosure sale, and the equitable exception to this rule does not apply when the dispute is between a junior lienholder and the mortgagor.
Surplus foreclosure proceeds must be paid to junior lienholders according to the priority of their liens before any surplus is disbursed to the mortgagor. The equitable exception to this general rule applies only to disputes among competing encumbrances (lienholders), not to disputes between a lienholder and the mortgagor. Therefore, General Bank, as third mortgagee, is entitled to priority over Westbrooke Pointe to the surplus funds.
[1] Surplus funds remaining after a foreclosure sale are disbursed to junior lienholders according to the priority of their liens, and only after all liens are satisfied may…
[2] The special equities exception to the general rule of surplus fund distribution applies to competing encumbrances, not to disputes between a junior lienholder and the mor…
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Join FLexlaw to unlock all legal intelligence“any surplus remaining after a foreclosure sale should be paid to the junior lienholders in accordance with the priority of their liens on the property and that only after the liens have been satisfied may any surplus be disbursed to the owner of the equity of redemption”
Establishes the foundational rule governing distribution of foreclosure surplus in Florida
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Join FLexlaw to unlock all legal intelligenceLima and Blanco, holders of a second mortgage, foreclosed on property owned by Westbrooke Pointe, which was also encumbered by a first mortgage and a …
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FERGUSON, Judge.
General Bank appeals from an order awarding surplus funds to the owner-mortgagor, after a satisfaction of a foreclosed second mortgage, over General Bank’s claim to the funds as a third mortgage holder. The holders of the second mortgage, Lima and Blanco, commenced a foreclosure action against the mortgagor, Westbrooke Pointe, and the third mortgagee, General Bank. After a summary judgment of foreclosure was entered in favor of Lima and Blanco, a judicial sale was held where a subsidiary of General Bank purchased the property for $349,977 subject to an existing first mortgage. The amount due and paid to Lima and Blanco was $323,963.15, leaving a surplus of $26,013.85. An evidentiary hearing was conducted on the motions of Westbrooke and General Bank both asserting claims to the surplus. At the hearing, General Bank presented evidence showing the existence of its debt in an amount exceeding $480,000, the encumbrance of the property by the lien of its third mortgage as security for the debt, and that the debt was in default. West-brooke offered no evidence to refute the bank’s claim. The court ordered the surplus to be disbursed to Westbrooke. We reverse.
It has long been the law in Florida that any surplus remaining after a foreclosure sale should be paid to the junior lienholders in accordance with the priority of their liens on the property and that only after the liens have been satisfied may any surplus be disbursed to the owner of the equity of redemption. Waybright v. Turner, 129 Fla. 310, 176 So. 424 (1937); Meyer v. Bricklayers, Masons & Plasterers Union, 144 Fla. 401, 198 So. 78 (1940); Sens v. Slavia, Inc., 304 So. 2d 438 (Fla.1974). Westbrooke argues that the special equities exception to the general rule applies in this case and precludes the award of the surplus to General Bank. We disagree.
The equitable exception was articulated by the Supreme Court of Florida in Tucker v. Crown Corp., 136 Fla. 517, 527, 183 So. 740, 745 (1938): In determining who is entitled to surplus proceeds arising in a foreclosure sale, it is the general rule that all incumbrances on mortgaged premises inferior to the mortgage on which sale is based, must be paid in order of time in which they respectively become liens, except as some equitable right demands a different order of payment.
See also Waybrigkt v. Turner, 129 Fla. 310, 176 So. 424 (1937). In plain language Tucker holds that the equitable exception applies to competing “encumbrances.” Westbrooke, as the mortgagor, clearly is not a lienholder; its equity interest does not “encumber” the property.
Because the equitable exception raised by Westbrooke is not applicable in a dispute between a junior lienholder and the mortgagor, under the general rule regarding priorities to a surplus, General Bank, as third mortgagee, is entitled to priority over the mortgagor to the surplus funds. The award of surplus to the third mortgagee is to be credited against all other amounts owed on the mortgage.1
Reversed and remanded for further consistent proceedings.
. We do not decide whether the third lienholder profited in this action on a resale of the property, or the amount of the balance owed on the third mortgage at the time of foreclosure on the second mortgage. Those issues of fact, the resolution of which are not essential to the disposition of this case, are to be decided in the pending foreclosure action on the third mortgage.
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Amado Evarito Garcia v. Stewart, 906 So. 2d 1117 (Fla. 4th DCA 2005)…So. 2d 1093, 1094 (Fla. 1st DCA 1993). “[A]ny surplus remaining after a foreclosure sale should be paid to the junior lienholders in accordance with the priority of their liens on the proper [*1121] ty...Gen. Bank, F.S.B. v. Westbrooke Pointe, Inc., 548 So. 2d 736 (Fla. 3d DCA 1989). Only after such liens “have been satisfied may any surplus be disbursed to the owner of the equity of redemption.” Id.; see Asher Perlin, et al., Disbursement of Surplus Proceeds from a Foreclosure Sale — The Urban Myth of the Ra…
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Marsdreamland LP v. MTGLQ Invs., L.P., 335 So. 3d 228 (Fla. 3d DCA 2024)…032(1)(b), Fla. Stat. (defining a “subordinate lienholder” as “the holder of a subordinate lien” which includes “a subordinate mortgage, judgment, tax warrant, assessment lien, or construction lien”); Gen. Bank, F.S.B. v. Westbrooke Pointe, Inc., 548 So. 2d 736, 736 (Fla. 3d DCA 1989) (“It has long been the law in Florida that any surplus remaining after a foreclosure sale should be paid to the junior lienholders in accordance with the priority ---PAGE 4--- of their liens on the property and that only…
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United States v. Heard Sneed and Willie Inez Sneed, 620 So. 2d 1093 (Fla. 1st DCA 1993)…nior lienholders in accordance with the priority of their liens on the property and ... only after the liens have been satisfied may any surplus be disbursed to the owner of the equity of redemption.” General Bank, F.S.B. v. Westbrooke Pointe, Inc., 548 So. 2d 736 (Fla. 3d DCA 1989). The rights of the United States arose at the time of the foreclosure and have not been extinguished. Mrs. Sneed has no equitable claim to the surplus because the junior lienholder’s claim has not been satisfied. Although the Uni…
Previewing 3 of 7 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Waybright v. Turner, 129 Fla. 310 (Fla. 1937)
- Walter J. Dolan Props., Inc. v. Vonnegut, 133 Fla. 854 (Fla. 1938)
- Sydnor J. Tucker v. Crown Corp., 136 Fla. 517 (Fla. 1938)
- Baron De Hirsch Meyer v. Bricklayers, 144 Fla. 401 (Fla. 1940)
- Sens v. Slavia, Inc., 304 So. 2d 438 (Fla. 1974)