A 13-year scramble, six figures on the table, and one missing detail decided who won
Florida just handed a foreclosed-property owner a surplus win and sent a sharp timing warning to every lienholder chasing sale proceeds.
If you hold liens against real property and count on collecting from a foreclosure sale, a Florida appeals court ruling issued June 3, 2026, drew a line you can't afford to miss.
Start with the numbers, because they tell the story. A five-unit apartment building in Hallandale Beach sold at a foreclosure public sale in August 2024 for $950,100. Once the mortgage was paid off, roughly $261,738 in surplus remained. The City of Hallandale Beach claimed every dollar of it, pointing to more than $1.7 million in code violation liens it had recorded against the building.
It walked away with $671.01.
The reason comes down to when those liens hit the record. When the bank filed the foreclosure in August 2011 and named the City as a defendant, the City held a single recorded lien on the property, a $671.01 charge for water, sewer, and garbage. The rest of its liens, the ones adding up to $1.7 million, were recorded between 2014 and 2023, long after the case was underway.
A trial judge ruled the City could collect only that original $671.01. The Fourth District Court of Appeal affirmed.
The logic is worth knowing if you ever expect to chase surplus funds. Florida's surplus statute pays subordinate lienholders ahead of the former property owner, but it limits that group to lienholders whose liens show up on the face of the foreclosure pleadings as an encumbrance on the property. Only the utility lien appeared in the foreclosure paperwork. The code violation liens never did. So as to those, the court held, the City didn't qualify as a subordinate lienholder at all. The court said the City was trying to stretch one pleaded lien into a claim for everything it recorded afterward.
The timing cuts deep here because this foreclosure crawled. The owner, Susana Shames, held the sale off for years through repeated bankruptcy filings and motions to cancel, and a first sale in 2017 was later vacated. The City kept recording new liens the whole time. None of it mattered for the surplus, the court said, because the statute keys the claim to the pleadings, not to whatever piles up while the case sits.
The court was careful to note the City wasn't left without options. It had other ways to pursue those code liens. It just couldn't pull them out of the foreclosure surplus.
The panel split. Judge May dissented, reading the statute to define who counts as a subordinate lienholder, not how much that party may claim, and would have let the City recover the liens that accumulated over the years.
For investors, lienholders, and anyone working distressed real estate, the lesson is clean and practical. To reach surplus money, your lien has to be on the face of the foreclosure pleadings. A lien recorded after the case begins can be perfectly valid against the property and still leave you with nothing from the sale. Get named, get pleaded, or line up another remedy, because surplus is settled by what's on the page, not by the total you're owed.
