Key Points

  • A third-party purchaser at a judicial foreclosure sale holds a legally cognizable property interest once it buys the property and the clerk issues a certificate of sale.
  • The county court violated the purchaser's due process rights by entering, ex parte, an agreed order between the homeowner and the association that vacated the sale and returned the purchaser's funds.
  • The Second District reversed and remanded for a duly noticed hearing on the homeowner's objection and emergency motion to vacate the sale.
  • The panel declined to reach the purchaser's argument that the homeowner's right of redemption was extinguished when the certificate of sale issued, because that argument was not preserved below.
  • Judge Villanti wrote the opinion, Judge Kelly concurred, and Judge Atkinson concurred in result only.

A Florida appeals court reversed an order that had undone a homeowners-association foreclosure sale, holding that the company that won the auction had a property interest entitling it to notice and a hearing before a judge set its purchase aside.

The Second District Court of Appeal ruled Oct. 23 for Real Estate Services Group Inc., the high bidder for Joseph V. Mills' Hillsborough County property at an October 2024 judicial sale. Five days after the auction, Mills paid the judgment amount. He and the Hickory Lake Estates Owners' Association then submitted an agreed order vacating the sale, and the county court entered it ex parte.

Judge Villanti wrote the opinion, and Judge Kelly joined it. Judge Atkinson concurred in result only, without a separate opinion. The panel sent the case back to the county court for a hearing on Mills' request to vacate the sale, this time with notice to the buyer.

The decision applies Second District precedent holding that a third-party purchaser at a foreclosure sale holds a protectable legal interest in the property. The panel held that the buyer's interest arose when it bought the property at the judicial sale and the clerk issued a certificate of sale. The homeowner and the association therefore could not undo the sale between themselves without first giving the buyer a chance to be heard.

"Because RESG held a legally cognizable property interest as a third-party purchaser, the order on appeal violated RESG's due process rights to notice and to be heard before the trial court vacated the sale," Villanti wrote, referring to the company by its initials.

The dispute began with unpaid association fees. Mills' property is subject to the association's covenants, which include payment of monthly fees, and the association placed a lien on the property for the unpaid amounts. The association sued to foreclose the lien in February 2024.

The trial court entered a final judgment of foreclosure on Aug. 29, 2024, and set the judicial sale for Oct. 18, 2024, with notice published in La Gaceta newspaper. On Sept. 25, Mills filed an answer and affirmative defenses, along with an emergency motion to vacate the foreclosure judgment. According to the opinion, he did not pay the judgment amount at that time.

Real Estate Services Group was the highest bidder at the Oct. 18 sale, and the Hillsborough County clerk issued the certificate of sale that day. On Oct. 23, Mills wired the judgment amount to the association's counsel. The same day, he filed an objection to the sale, an emergency motion to vacate it, and a notice of proof of his payment.

Mills and the association also asked the court to ratify, without a hearing, their agreed order vacating the sale and returning the buyer's funds. The order directed the clerk not to issue a certificate of title to Real Estate Services Group. The company was not served with the emergency motion, the notice of payment or the agreed order, the opinion said.

When the company learned of the order, it objected that it had been denied its right to be heard as a third-party purchaser. The trial court denied its motion to vacate the agreed order, and the company appealed under Florida Rule of Appellate Procedure 9.130. Judge Matthew Felix presided over the case in the county court.

Turning to the due process claim, Villanti stressed the constitutional stakes. "Property rights are among the most basic of substantive rights protected by the Florida Constitution," he wrote. The opinion also quoted a 2022 Second District decision that was itself quoting the U.S. Supreme Court's 1972 decision in Board of Regents of State Colleges v. Roth: "When protected interests are implicated, the right to some kind of prior hearing is paramount."

The panel relied chiefly on two of its own precedents. The first, Skelton v. Lyons, decided in 2015, stated that "a third-party purchaser has a protectable legal interest in a parcel purchased at a foreclosure sale." The second, Shlishey the Best Inc. v. CitiFinancial Equity Services Inc., decided in 2009, held that a buyer whose rights were still inchoate, or not yet complete, during the ten-day objection period nonetheless had "protectable legal rights in the property."

From those decisions, the panel concluded, quoting Skelton, that "when a sale is vacated without notice to and an opportunity to be heard by the purchaser, due process is violated." Villanti added, "To suggest otherwise is to completely ignore the well-established rules of Shlishey, Skelton, and numerous holdings from our sister district courts." The opinion cited decisions of the Third and Fourth District Courts of Appeal in support.

The panel declined to decide a second argument the company raised. Real Estate Services Group contended that Mills' right of redemption was extinguished when the clerk issued the certificate of sale. Villanti wrote that this argument "was not raised below and has not been preserved for our consideration," citing the Florida Supreme Court's 2005 decision in Sunset Harbour Condominium Association v. Robbins.

The ruling leaves open whether Mills' payment can still defeat the sale. The panel addressed only the procedure by which the county court vacated it.

Matthew D. Wolf of Ivanov & Wolf PLLC in Tampa represented Real Estate Services Group. Gabriel Strine of Strine Legal Services PLLC in Odessa represented Mills. The association did not appear in the appeal.

On remand, the county court must "conduct a duly noticed hearing on Mills' objection and emergency motion to vacate the foreclosure sale," the opinion said. The opinion is subject to revision before official publication.