I’m thinking about buying a house in Florida because I heard that you can get a really good deal on foreclosed properties there. I’ve been looking at preforeclosure homes on the Internet and a lot of them look really good, at least from the outside. The only thing that really worries me is that I read that the homeowners can “redeem” the home after the foreclosure and get the house back. Is this right? Could the owners reclaim the home after the foreclosure sale somehow?
Florida homeowners who’ve been foreclosed on can, in fact, get their house back after someone has bought it at the foreclosure sale by paying off the full amount of the unpaid loan plus certain additional amounts. This is called “redeeming” the home.
However, this is not a big problem for potential buyers in Florida like yourself, because the homeowners would have to redeem the house very shortly after the sale (generally, within a day). Unless they can do that, they lose the right to get the home back by this legal means.
We’ll describe below how Florida foreclosures work and why the process probably shouldn’t affect your ability to feel secure about your foreclosed-home purchase.
Florida Homeowners’ Right to Redeem the Home
Florida foreclosures are judicial, which means that after the homeowners default on a mortgage, the lender must file a lawsuit in court to foreclose the home. The foreclosed homeowners could redeem the home after the foreclosure sale, but they would have to do it:
- before the court clerk files the certificate of sale (which is usually done within one day of the sale), or
- by the time specified in the foreclosure judgment (which typically specifies the same thing -- that the homeowner can redeem up until the clerk files the certificate of sale, though it could be longer) (Fla. Stat. Ann. § 45.0315).
How Much the Foreclosed Florida Homeowners Must Pay to Redeem
In order to redeem, the homeowner would have to pay the full amount of the debt as stated in the judgment, including interest, attorney's fees, and costs (Fla. Stat. Ann. § 45.0315).
Redemption rarely occurs, and you can see why. A homeowner who, only a short time ago, was unable to keep up on the home’s mortgage payments would have to find a way to come up with not only the full amount of the unpaid loan, but additional amounts to cover interest, fees, and costs -- and round this up by the sale date or shortly thereafter.
If the foreclosed homeowner did take steps to redeem, you would probably first learn about it when the court notifies you that they have redeemed the home.
The IRS Can Redeem After the Foreclosure
It's possible, but not common, for the IRS to redeem the property after a foreclosure if it held a federal tax lien on the home.
Under federal law, the IRS gets a 120-day redemption period. In order to redeem the property, the IRS would have to pay you the amount you paid at the foreclosure sale, plus interest, as well as reimburse you for certain expenses you paid, such as the costs of necessary repairs and insurance. If the IRS considers redeeming the house, it would let you know beforehand by sending you a notice.
Other Things to Think About When Buying a Foreclosed Home
Besides the possibility of redemption, there are other issues to consider before buying a home at a foreclosure sale. The property may look good on the outside, but could be in be in bad shape inside -- an owner who couldn't pay the mortgage probably couldn't afford upkeep either. And you won’t get any seller disclosures regarding its condition before the sale, as you would with a regular, non-foreclosure sale.
Moreover, you will have to purchase the property “as is,” without negotiating over repairs. (Learn more in Nolo’s Buying Foreclosed Properties area.)
Finding Florida’s Redemption Law
To find the statute that discusses the homeowner’s right to redeem the home in a foreclosure in Florida, go to Title VI, Chapter 45 of the Florida Statutes.