Home foreclosures are not nearly as prevalent as they were 10 years ago. Even in a much better economy homeowners are still finding themselves in financial distress and falling behind on their mortgage payments. In Broward County several dozen homeowners each week are served a Lis Pendens notice. This is the beginning of the foreclosure process. If you have been served a Lis Pendens recently, here is an overview of what you can expect.
Florida is known as a judicial state when it comes to foreclosure. That means that the lender (plaintiff) must bring legal suit against the borrower (defendant) to force the sale of the subject property at a foreclosure auction. There is a specific process they must follow. It takes time and costs the lender a lot of money in legal fees and other court costs. These costs can be passed on to you if you have significant equity in the property.
A typical foreclosure in Florida has 4 phases.
1. Lis Pendens notice (Notice of Default)
2. Final Judgement
3. Foreclosure Auction
4. Objection Period
Lis Pendens is latin for Suit Pending. It is a notice recorded at the county records department and is accessible to the public in person and online. It serves notice to all parties involved of the pending foreclosure action. Other parties include anyone with an ownership claim or other lien holders either recorded or not recorded. A homeowner will be served a Lis Pendens notice usually sometime between missing payments for 3 to 6 months.
Final Judgement. Another three to six months or more can go by before a Final Judgement amount can be determined in court by a judge. The Final Judgement is a summation of the current principle owed plus any other costs incurred by the lender. Such as attorney fees, court costs, late charges, added interest on the loan, escrow advances for taxes and insurance, 3rd party inspections, appraisals. All of these costs and fees can add up to a significant amount of money, destroying the current equity in the property. The final judgement contains the order and date for the foreclosure auction.
Foreclosure Auction. About 90 days from the date of the final judgement comes the foreclosure auction. It is run by the county and almost all of them take place online. Live foreclosure auctions are rare. At the auction the lender will set their maximum bid for the property. If no third party bids above that amount, the lender takes back the property and then usually hires a broker to sell it for them. If an investor bids over the lenders maximum amount they become the new owner of the property. If the property is sold above the final judgement amount, whatever is left over is divided among any other lien holders depending on their lien priority. What remains after that, if anything, goes to the prior owner. Immediately after the sale the winner bidder receives a Certificate of Sale. They have no rights to the property yet, and they won't until after the Objection Period. They can't legally enter the property or begin evictions until they receive a Certificate of Title.
Objection Period
After the auction there is a ten day objection period during which the prior owner, and other parties like a tenant or other lien holder, can contest the sale. If no objections are filed the auction winner is issued a Certificate of Title. If an objection is filed it could delay the transfer for many months depending on the courts case load. Investors trying to purchase foreclosures need to factor in these potential delays. They are required to pay the bid balance the next business day regardless of whether an objection is filed.
The new owner, whether it is an investor or the lender must then evict the current occupants in order to regain possession of the property, or work out some kind of deal to surrender the property. This is often called a Cash for Keys arrangement. An eviction can take 60 days or much more depending on the courts workload.
Someone who has recently been served their Lis Pendens notice could, in theory, remain in the property for a year or two or even more if they have a good attorney that can stall the process at strategic intervals. It could be the right route to take for some homeowners. But it is expensive and by continuing to not paying your mortgage will wreck your credit. If it is unsuccessful you could destroy any equity you have in the property.
If you go all the way through to being evicted your future housing options will be extremely limited. It is very difficult to function in today’s society with poor credit. If you let your property get foreclosed on, your rental options become very limited. Be proactive. Speak with an attorney and see if it worth fighting the foreclosure. Filing for bankruptcy protection could be another option. If you can’t afford an attorney selling is probably your best option. It can be done even if you owe more than your property is worth. This is called a short sale.
I have been helping people in these situations for almost two decades. I have been on the brink of foreclosure and bankruptcy myself during the real estate market downturn. I understand the stress it can cause. Fortunately, you still have options open to you. However, the longer you wait to take action, the fewer options you will have.
If you have equity in your property, I can get it sold quickly to prevent further damage to your credit rating.
If you don’t have any equity, I can negotiate with your lender to sell the home for less than you owe on it, to prevent foreclosure. This is called a short sale. It was a common occurrence not too long ago and I have had many successes for my past customers.
In some circumstances, I even can make you a cash offer on your property and close on a date of your choosing, if you want to avoid the hassle of putting your home on the market.
Give me a call at 954-895-2431 for a consultation as soon as you can.
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Serving The Greater Fort Lauderdale area since 2006
You can reach me 954-895-2431
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