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Article
Courtesy of The Bradenton Herald
By Alexandra Glorioso
Published February 26, 2025
A rarely used legal maneuver exposed by the Miami Herald
that allowed an attorney to rewrite foreclosure rules to benefit his clients
would be more regulated and challenging to use in most foreclosure auction
proceedings under a Miami lawmaker’s amended bill, which passed its first
committee.
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The bill could make
the use of these procedures more common in more complex
commercial foreclosures, but would require their use to be
more clearly spelled out.
Sen. Ileana Garcia credited the Herald’s “Rigged”
investigation for exposing a “lack of transparency” around
little-known “alternative” foreclosure auctions, where
attorneys and judges agree on a unique set of rules for the
proceeding. The Herald detailed how Hollywood attorney Brad
Schandler used the method to write rules that gave his
clients outsized advantages when bidding on foreclosed
properties.
Garcia’s bill would make it hard to implement the three
working principles that Schandler used to purchase property
on the cheap at foreclosure auctions: On-site auctions, no
redos, and unlimited bidding credits. They enabled him to
hold an auction in less-accessible locations like a
condominium hallway, ensure his clients got properties for
as cheap as $100 when the highest foreclosure bidder didn’t
make good, and edge out competitors with bid amounts his
clients wouldn’t be required to pay. |
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Sen. Ileana Garcia, R-Miami, listens to debate on a
bill on the Senate floor
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Current Florida law “lacks clear standards for requesting
or conducting alternative sales, creating opportunities for lender
representatives to manipulate the process,” Garcia told the Senate Judiciary
Committee before the panel unanimously approved her amended bill.
Garcia’s proposal, SB 48, still has two committee stops in the Senate before
it is considered by the full chamber. It doesn’t yet have a companion in the
House. But there’s still time. Session begins March 4.
Garcia wants to create a new section of law dedicated to “alternative
judicial sales procedures” that make practices Schandler commonly
implemented more difficult, while outlining how the method could be used
legally.
It would likely be more expensive, allowing for a third-party auctioneer,
making it more appropriate for commercial foreclosures like a hotel or golf
course where, given the relatively few bidders scattered potentially far and
wide, unique rules would be helpful. Alternative sales would require consent
of the property owner.
Under the bill, conventional foreclosures — such as when a person can no
longer afford their monthly dues because of increases in insurance or high
costs of building repairs — would remain with the clerk of court, where
there are no special rules allowed.
“A condo sale of a penthouse might follow alternative procedures,” said
Diane Wells, an attorney who represents creditors in business litigation,
and who worked with another lawyer and Garcia’s staff on the amended bill
language. “But the sales the Herald wrote about would be conventional
sales.”
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