Florida ARECS Blog

Attorney Members, Real Estate Professionals, Consumers

Florida ARECS is dedicated to providing the most up-to-date and relevant resources for its Attorney Members, as well as helping fellow Real Estate professionals and guiding consumers.



Danger Zone- Buying Property at the Clerk's Foreclosure Auctions

By: Gary L. Davis, real estate lawyer in New Port Richey, Florida

My clients purchased a mortgage foreclosure property from the courthouse. After their purchase, the homeowner’s association demanded they pay back assessments that totaled more than $20,000.00. Didn’t they get the property free and clear from the sale?

The simple answer is no.

Florida law provides that if someone other than the Lender who foreclosed on the property, is the successful bidder and the property is subject to either Condominium assessments or Homeowner Association assessments, that person (Third Party Purchaser) is liable for those unpaid assessments. This includes all unpaid assessments due prior to the auction and thereafter for as long as the Third Party Purchaser owns the property. Therefore, your clients’ only remedy, as Third Party Purchasers, is to sue the previous owner because they are jointly and severely liable for the assessments. However, because the property was in foreclosure, the odds of success in collection are probably not great.

For example: The property is worth $75,000. The Third Party Purchaser pays $70,000 at foreclosure auction. He or she thinks she is going to make $5,000 on the investment. Then the Lien Notice comes in from the Association’s attorney demanding $18,000 in past due association assessments. The Third Party Purchaser has just lost $13,000 on this deal. Those assessments will have to be paid or the Association can foreclose on the Third Party Purchaser. At the very least, he or she will have to pay that lien in the event he or she sells the property, even if the Association does not foreclose. Moreover, the lien will likely continue to accrue late fees, interest and attorney fees. Unless you know for certain the amount of the assessment liens on the property and you consider it in setting the amount you are willing to bid, it is wise to avoid buying these properties at clerk's foreclosure auctions.

There are also dangers involved when purchasing properties at the clerk’s foreclosure sale when a Homeowner’s or Condominium Association is foreclosing on their liens. Oftentimes, there is a mortgage on the property. If you are the successful bidder, you will take title to the property subject to any existing mortgages. If the mortgage is not satisfied, the lender will be able to foreclose on the property.

For example, you pay $10,000 at auction and get title to a property with an assessed value of $150,000. You believe you have the deal of a lifetime. Here is where that saying “too good to be true” comes into play. You discover there is a mortgage in the amount of $150,000. That mortgage did not get extinguished at the foreclosure sale when you paid the $10,000.00. You will have to pay off the mortgage balance in addition to the money you bid at auction to get title to the property free and clear. Instead of making $140,000, you just ended up losing $10,000. You should consult with a real estate lawyer before bidding on an auction property. They will check the chain of title and alert you to any liens prior to bidding.


This article was sponsored by the Bay Area Real Estate Council. It was written by Gary L. Davis, who is a real estate lawyer in New Port Richey, Florida, at Gary L. Davis, P.A. Gary can be reached via email at gary.davis@garyldavislaw.com or contacted at 727-376-3330.

The opinions of any particular author are not necessarily the opinions of Attorneys' Real Estate Councils of Florida any of the local Real Estate Councils or Attorneys’ Title Fund Services, LLC.