By: Scott J. Kennelly and Jacy Owens

Although typically foreclosure actions are brought in state court, lenders may occasionally find themselves pursuing foreclosure in federal court. Although the costs and procedures for conducting the foreclosure sale are basically consistent across Florida state courts, procedures for foreclosure sales in federal courts in Florida can be more costly and cumbersome.

Generally speaking, the U.S. Marshal’s Office is the designated entity to conduct foreclosure sales in federal court. However, arranging for a marshal to conduct the sale may be time-consuming and expensive. The marshals may require a deposit, often of several thousand dollars, to be paid to cover handling the foreclosure sale and the cost of publication. Additionally, the marshals receive a commission from the sale price in the amount of 3% of the first $1,000, and 1.5% after that, with a minimum of $100 and a maximum of $50,000 to be paid as commission.

Perhaps due in part to this expense, marshals rarely handle foreclosure sales. A more efficient practice is to request the appointment of a special master by the Court, for the limited purpose of conducting the sale. Depending on the individual chosen, the cost for the special master can be from $500 to a few thousand dollars, with no commission required, and thus is a more cost-effective approach.

It is recommended to conduct the foreclosure sale in accordance with both the Florida and federal statutory requirements. Following the sale, the special master should collect any funds from the winning bidder and submit a report of sale to the Court. The lender should then request that the Court confirm the sale and order the special master to issue a deed, assuming no objections were made within 10 days of the date of the sale. Although there are certainly other considerations lenders should discuss with counsel in determining the best course of action in a federal foreclosure case, the appointment of a special master to conduct the foreclosure sale may be a useful alternative to an otherwise more costly procedure.