Deficiency Judgment After Foreclosure Information
A deficiency occurs when: the foreclosure sale price is less than the outstanding mortgage balance (the property's value has declined below the debt), the lender bids the full debt amount but the sale price is still insufficient, or the lender credit bids less than the full debt (acquiring the property for less than the outstanding balance). The deficiency judgment: allows the lender to pursue the borrower's other assets (wages, bank accounts, and other property) to collect the remaining debt, is a personal judgment against the borrower (enforceable like any other money judgment), and may be collectible for 20 years (the standard Florida judgment lien duration: 10 years, renewable for an additional 10 years).
Florida Legal Definition
Deficiency judgments in Florida are governed by: Florida Statutes §702.06 (Right to Deficiency Judgment). Under §702.06: the court may enter a deficiency judgment if the sale price is less than the debt, and the deficiency is limited to: the difference between the judgment amount (the debt including interest and costs) and the fair market value of the property at the time of sale (not the sale price; the court determines the FMV). Under Florida case law: the lender must file a motion for deficiency within one year of the foreclosure sale (failure to file within one year bars the deficiency claim).
How It's Used in Practice
Attorneys manage deficiency judgments for lenders and borrowers. For lenders, the attorney: evaluates the deficiency potential (comparing the debt to the property's fair market value), files the motion for deficiency within one year of the sale, presents evidence of the fair market value (appraisal, BPO, or CMA), and pursues collection of the judgment (garnishment, levy, and judgment lien). For borrowers, the attorney: defends against the deficiency motion (arguing the fair market value is higher than stated, reducing the deficiency), negotiates a settlement (offering to pay a reduced amount to satisfy the judgment), or asserts the homestead exemption (protecting certain assets from collection). The attorney advises: the 1-year deadline for filing the deficiency motion is strictly enforced; lenders must act promptly.
Key Takeaways
- Deficiency: debt balance exceeding foreclosure sale price.
- §702.06: deficiency based on FMV, not sale price.
- Motion must be filed within 1 year of foreclosure sale.
- Judgment lien: 10 years, renewable for 10 more.
- Borrower may assert homestead and other exemptions against collection.
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Florida Law Reference
Fla. Stat. Ch. 702
Florida is a judicial foreclosure state. This chapter governs the foreclosure process, including notice requirements, sale procedures, and deficiency judgments.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC