Good News for Investors with a Focus on Foreclosure Sales:

A Light at the End of the Tunnel.

One of the biggest pains for an investor who purchases a property in foreclosure is dealing with subsequent liens filed by various parties, in particular unscrupulous municipalities trying to milk the cow for every ounce of milk.  While some of these costs are legitimate, many times they are not.  Finally, the court has decided to lay down the law when the Fourth District Court of Appeal recently reconsidered its ruling in Ober v. Town of Lauderdale-by-the-Sea. A revised decision was issued, which is great news for buyers purchasing a home through a foreclosure sale.  These type of sales often come with a lot of potential headaches such as the nuances of the bidding process to purchase the home, the abandonment of the home and the accumulation of liens on the property.  With the Fourth District reversing itself in the Ober case, those who purchase a home through a foreclosure sale can finally see the light at the end of the tunnel.

Ober deals with the application of Florida’s lis pendens statue, which is the formal notice that initiates a foreclosure lawsuit.  The issue is what happens to liens placed on a property between the entry of a final judgement of foreclosure and a judicial sale after a notice of lis pendens has been recorded.

James Ober had purchased an abandoned, zombie foreclosure home from the bank after the bank purchased the home at a foreclosure sale.  Ober discovered that after the entry of the final judgment of foreclosure, the Town of Lauderdale by-the-sea had placed seven liens on the property based on various code violations.  Ober filed suit to remove the liens against his property, which eventually led to the appeal.

In the initial Ober decision dated August 24, 2016, the Fourth District decided that liens placed on a property during the time between entry of final judgment of foreclosure and the judicial sale are not “discharged.”  In other words, the court ruled in favor of the Town.  Under this first decision, due to the long lag of time between the entry of judgment and sale of the property, creditors could place liens on a property, creating a potential nightmare for purchasers.  The revised Ober decision, issued on January 25, 2017, takes a different stance. Under the current law, liens entered between the time of the final judgment of foreclosure and the judicial sale are “discharged” unless the lien holder acts diligently and intervenes in the proceedings. Action must be taken within thirty days after the recordation of the notice of lis pendens.

This new decision should make buyers purchasing at a foreclosure sale sleep easier at night with their full glass of milk on their nightstand.