After the foreclosure of a mortgage that results in payment of funds in excess of the judgment amount, junior lienholders may file claims asserting rights to the surplus funds. The process for asserting a claim to surplus proceeds following a judicial sale is found in section 45.031, Florida Statute. The statute requires that a claim to surplus funds must be filed within 60 days after the judicial sale.

When does the 60-day time clock start ticking? Does the 60-day time clock start upon the public auction of the property, the clerk’s issuance of the certificate of title or some other event? The Florida Supreme Court answered this question in Bank of New York Mellon v. Glenville, 252 So. 3d 1120 (Fla. 2018) holding that the 60-day clock begins upon the clerk’s issuance of the certificate of disbursements.

In Glenville, there were three mortgages on the property. The first mortgagee sought to foreclose its interest under the first mortgage. A Final Judgment was entered against the Glenvilles and a judicial sale was set for July 2, 2015. After the sale, the clerk issued the certificate of sale on July 6, 2015, the certificate of title on July 14, 2015, and the certificate of disbursements on July 2, 2015. The certificate of disbursements reflected a surplus of $86,093.27.

On August 4, 2015, Florida Housing filed a claim asserting its right to $20,573.64 of the surplus amount. On September 1, 2015 – 61 days after the judicial sale – the Glenvilles filed their claim on the surplus. The Glenvilles admitted that Florida Housing’s claim was timely and requested that the trial court issue an order disbursing $20,573.64 of the surplus to Florida Housing and the remainder to the Glenvilles.

On September 2, 2015 – 62 days after the judicial sale – Bank of New York Mellon (“BONY”), the holder of the second mortgage, filed a claim asserting its right to the entire surplus amount. However, because BONY’s claim was filed more than 60 days after the judicial sale objections to the claim were filed.

After a hearing on which parties were entitled to claim the surplus, the trial court ordered disbursement pursuant to Florida Housing’s claim, and the balance to the Glenvilles finding that the BONY’s claim was untimely since it was not submitted within 60 days of the foreclosure sale held on July 2, 2015.

BONY filed an appeal arguing that the foreclosure sale is not complete until the clerk issues the certificate of sale and their claim was timely since it was filed within 60 days of issuance of the certificate of sale. The Second District Court of Appeal rejected BONY’s argument finding that the cutoff for submitting claims for surplus funds is 60 days from the date of the judicial sale.

The Second District Court’s opinion in Glenville was in direct conflict with Fourth District Court of Appeals’ opinion in the case of Straub v. Wells Fargo Bank, N.A., 182 So. 3d 878 (Fla. 4th DCA 2016). The Fourth District in Straub held that the 60-day clock begins when the clerk issues and files the certificate of title. Since the Second and Fourth District Courts of Appeal were in direct conflict, the question was certified to the Florida Supreme Court.

The Florida Supreme Court conducted an in-depth analysis of various sections of 45.031 and other statutes directly related to judicial foreclosure proceeds. In reviewing these statutes, the Court concluded that both the Fourth District Court’s opinion in Straub and Second District Court’s opinion in Glenville were decided incorrectly. Instead, the Court interpreted the phrase “60 days after the sale” means after the issuance of the certificate of disbursements.

Knowing the timeframes for making timely claims on surplus proceeds is critical to protecting a lienholder’s interests. If your lien was foreclosed by a superior lienholder, be sure to keep track of the judicial sale. Once the certificate of disbursement is issued check if there are any surplus proceeds. If so, make sure a valid claim is filed within 60 days of the issuance of the certificate of disbursement.