It is very important anytime you are looking to purchase any type of property in foreclosure, that you do your due diligence. There are a variety of formats that foreclosures come in. In judicial foreclosure states, foreclosures are auctioned off at the courthouse after the judge rules in favor of a lender. In nonjudicial foreclosure states, the auction is handled by a trustee instead of a judge. Florida is a judicial only state, and thus this past December the courts handed down judgement on an appeal regarding the prior purchase of a a foreclosed property.
A Coral Gables-based investor was ruled against in a foreclosure sale dispute of a property. that came with unresolved legal issues. Thriving Investments LLC was a third-party buyer in the judicial foreclosure sale. The foreclosed property is located in the Miami’s garment district, and was bought for an estimated $300,000. After the transaction was completed, the investment company found out that it did not own the property outright, because it was subject to a pre-existing debt that was not accounted for in the initial sale of the foreclosed property.
Thriving Investments only learned after the sale, that the the final judgement on the property only foreclosed on a second mortgage, which left a superior claim on the property. Any superior claim that is not paid for as part of the foreclosure auction, is still considered live after and must be accounted for in the sale of a foreclosed property.
Attorney Louis Charles Arslanian, who represents FVZ Inc., (holder of the mortgage on the property) said, “Even if they had standing, the problem is when you buy in foreclosure you need to know whether you’re buying second, third or first. You’ve got to do your homework.”
Thriving Investments attorneys, Allotter Rodz, Stephen Maher and Alfredo Gonzalez Jr. countered that as a successful bidder at the original foreclosure sale, they are able to challenge the underlying judgment. They went on to argue that the foreclosure should have never been finalized in the first place, because the plaintiff, who was a holder of an inferior mortgage, lacked the ability to foreclose on the property.
FVZ’s attorney counteracted the argument by stating that the bidder can only question issues regarding the sale of a foreclosed home, and in this case there where no problems with the sale. On the basis of this rule, Thriving Investments had no right to challenge the outcome of the original judgement, as it does not pertain to the actual sale of the property.
In the end, Miami-Dade Circuit Court Judge, John Schlesinger and the Third District Court of Appeals agreed with FVZ’s attorney Edward Holodak, and the case was dismissed.
If you are facing foreclosure and want to learn more about your rights, Graham Legal invites you to set up an initial consultation with a foreclosure defense attorney in Miami today.