New Florida Foreclosure Case – Buyer Beware

By Richard J. Swift, Jr.

On August 24, 2016, Florida’s Fourth District Court of Appeal issued an opinion in Ober v. Town of Lauderdale-by-the-Sea, No. 4D14-4597, 2016 WL 4468134 (Fla. 4th DCA August 24, 2016) that is likely to create unsuspecting liabilities to many unwary buyers purchasing distressed real estate in Florida. Buyers need to make sure they do the proper due diligence when buying distressed properties by judicial sale.

According to the Ober Court, Florida’s Lis Pendens Statute (“FLPS”) does not apply to any liens filed after the final judgment is entered in the case but prior to the judicial sale. Normally it was widely believed that the FLPS would discharge these liens as well as any liens filed prior to the lis pendens being recorded against the property. That means the buyer of the property is on the hook for any liens that may attach after the final judgment is entered until the property is purchased in the judicial sale. Unfortunately with the prior back log of foreclosures some sales do not occur for a significant period of time after the final judgment is entered. Buyers must be aware of this and take necessary steps to the extent possible. In fact, some may believe a full title search may be effective to safe guard against this new ruling. However, in some counties within Florida the title company cannot certify a title search for weeks as the county records are backed up due to the recent high volume in the real estate market. Buyers should seek the advice of competent legal counsel to understands the risks associated with buying properties from judicial sales following the Ober Court’s ruling.

For questions regarding the Ober Court decision or other related due diligence matters, please feel free to contact me at rswift@garlaw.com or 239-789-2262.