A foreclosure judgment, followed by sale of the mortgaged property, doesn’t necessarily end a foreclosure case. If the sale proceeds don’t fully pay the debt, the next step is a money judgment against the borrower for the difference (a “deficiency judgment”).

“The amount for which a mortgaged property sells at foreclosure sale, whether to the mortgagee or to a stranger, is (less such costs and expenditures as provided in the final judgment of foreclosure) applied to the debt as fixed by the final judgment of foreclosure.” Gottschamer v. August, Thompson, Sherr, Clark and Shafer, P.C., 438 So.2d 408 (Fla. 2d 1983).

When a third party is the successful high bidder at the sale, the net sale proceeds go to the lender and it’s easy to calculate whether they’re sufficient to fully pay the debt. If they aren’t, the lender can seek a deficiency judgment.

But often there are few or no third party bidders at the sale, and the lender ends up getting title to the property for a minimal bid. Such a bid may not be a good indicator of the property’s value, so the court will take evidence to decide whether the foreclosure judgment amount has been paid in full, and if not, how much debt remains unpaid.

When the lender ends up with the property, a deficiency judgment is calculated as the difference between the amount owed (as reflected in the foreclosure judgment) and the fair market value of the property on the date of the foreclosure sale. Ahmad v. Cobb Corner, Inc. 762 So.2d 944 (Fla. 4th DCA 2000). But if the successful high bid at the sale actually exceeds fair market value, the full amount of the bid is used. See Gottschamer, above.

A deficiency claim generally results in a battle of appraisal experts, with lender’s and borrower’s experts disagreeing on the property’s value. The court will consider, but isn’t bound by, these valuations. As long as there is substantial evidence supporting the judge’s decision, an appellate court won’t second guess it. In fact, the judge may come up with a different value than either expert. Ramphal v. TD Bank, N.A., 42 FLW D57c (Fla. 5th DCA 2017) (trial court has discretion to find value different than either expert if a basis for doing so is supported by competent substantial evidence). See also, Friedman v. Mercantil Commercebank, N.A., 42 FLW D407a (Fla. 3rd DCA 2017) (trial court has broad discretion in determining fair market value based on evidence in the record, including valuation opinions from competing expert witnesses).

For valuation purposes, the only date that matters is the date of the foreclosure sale. See Empire Developers Group, LLC v. Liberty Bank, 87 So.3d 51 (Fla. 2d DCA 2012), which reversed a deficiency judgment where the only value testimony was from an appraisal dated five months later, with no competent testimony that the value on the sale date would have been the same. Evidence of appraisals of value on other dates can still be helpful, provided there is testimony tying that value to the sale date as well.