What is a deficiency judgment?
A deficiency judgment is a court order requiring a borrower to pay the difference between the foreclosure sale price and the total debt owed to the lender.
When a lender forecloses on a home in the Jacksonville Metro area and the property sells for less than the outstanding mortgage balance, that gap becomes a deficiency. A deficiency judgment is the court order that allows the lender to pursue the borrower for that remaining debt.
In Florida, deficiency judgments are governed by strict statutory limits. Under Florida law, a lender generally has five years from the date of the foreclosure sale to file a deficiency claim. However, if the property is a homestead, the deficiency is eliminated entirely in most cases. Florida law also restricts deficiency recovery on certain purchase-money mortgages, particularly when the sale is conducted as a judicial foreclosure.
The amount of a deficiency judgment typically includes the unpaid principal, accrued interest, attorney fees, and court costs, minus the fair market value of the property at the time of sale. This distinction matters because the actual proceeds from the foreclosure sale do not always determine the deficiency amount. Courts may consider the property's fair market value instead.
For borrowers facing foreclosure in Florida, understanding whether a deficiency judgment applies is crucial. Those seeking clarity on deficiency protections or risks should consult with foreclosure defense attorneys who can review their specific mortgage terms and homestead status.