declaratory judgment action seeking distribution of surplus funds

[Paul Mendel]

Hello All,

I run a condo association in Pinellas county, FL, and we had a unit sell at tax auction last year, there was significant surplus funds from the auction (about 8k, the HOA was owed over that and the tax lien beat us to foreclosure). We where the only lien holder to reply to the surplus funds and submitted our paperwork properly. We know from dealing with it the bank (1st lien holder) is MIA and has not been contactable throughout our foreclosure, tax lien foreclosure, or the quite title suit the new owner brought up after buying it.

Now a year later I call the county asking why we have not been issues the funds(we where told it would take up to a year) as the only lien holder to respond(Florida has great online records where you can check) in the time allowed, And I get this response:

"I just wanted to let you know the status of your surplus claim. The county attorney’s office recommended an interpleader action on this file because they have not received a claim from the primary lien holder. It usually takes a few months before an interpleader case is scheduled. The county attorney’s office recommends that if you would like to expedite the process you may wish to consider filing a declaratory judgment action seeking distribution of surplus." 

So when talking to the person behind the phone she says basically even though the bank did not file a claim of lien the county gives them special permission and a large amount of time to request it anyways. But I can do this "declaratory judgment action" But she has "no idea what that means or how to do it" My local attorney from the HOA said they rather not get involved and that it would be in our best interest to just keep waiting...

Any ideas or suggestions??

[Dion DePaoli]

An HOA with a proper lien is entitled to surplus in Florida. Surplus needs to be claimed and then ordered for disbursement.

@Paul Mendel the clerk told you what to do even though she didn't understand it herself.

When the surplus is created a certificate is filed and held by the clerk.  It is a Certificate of Surplus.  Each interested party [in the subject property] is then given a chance to lay claim to all or a portion of those funds held in certificate.  The party must fill out the form and send it in.  The claims are processed by the court and the hierarchy of disbursements is set forth in an order issued from the court to the clerk to pay out the funds.

In your situations, the clerk is saying they know the first lien is present and probably has a right to claim these proceeds but they have not filed yet.  The clerk suggested to you that you interplead the surplus, in other words, you go in front of a court to settle the dispute your claiming being the only claim made versus that of waiting for any other claim to be processed.  The clerk is saying scheduling that type of hearing can take a little time.  If you do not wish to wait, then you would have to file a motion for declaratory judgement which essentially asks the court to make the same ruling.  

In your particular case, since it seems the Mortgagee is MIA either path probably works.  Since both result in the likely absence of any other potential claimant from expressing an interest in the surplus.  You filing the motion for DJ just brings it before the court faster.  That is why the attorneys are telling you to just wait.  Essentially telling you to simply attend the interpleading hearing and as the only claimant you will be fine.  Having your attorney file a MDJ will cost money in legal expenses that might not make sense for the amounts collectible.  

Do notate, the clerk can not distribute any funds unless they are order by the court.  

I would call the clerk back or talk to your counsel about securing the interpleading hearing date and sit back and wait for it to come around.  Good luck.