Question 1

Why is Miami CMBS REO less common than in other major markets?

Accepted Answer

Florida's judicial foreclosure process requires circuit court proceedings that typically take 18-24 months and involve significant legal fees and regulatory costs. CMBS special servicers have strong financial incentives to avoid this process, so Miami workouts are resolved through deed-in-lieu, note sales, or negotiated property sales at rates above those in fast-foreclosure markets. The REO that does exist in Miami CMBS tends to be from situations where litigation (borrower challenges, junior lienholder disputes, partnership conflicts) made early resolution impossible, forcing the full circuit court path.

Question 2

What Miami CMBS REO asset types are most active in 2026?

Accepted Answer

Boutique and select-service hotel properties in Miami Beach and Wynwood lead Miami CMBS REO by count, reflecting the hospitality sector's workout complexity (franchise agreements, operating leases, HOA structures). Brickell ground-floor retail from 2015-2018 mixed-use developments is the second category. Wynwood and Design District retail from the same period is third. Miami multifamily CMBS is not a meaningful REO category given the sector's continued strong performance in South Florida.

Question 3

How does Florida circuit court foreclosure affect Miami CMBS REO title?

Accepted Answer

Florida circuit court foreclosure produces a final judgment and certificate of title that, once recorded, extinguishes junior liens and delivers title to the foreclosing party (the CMBS trust). The title is generally clean for major encumbrances, but buyers of Miami CMBS REO should still engage Florida-licensed title counsel to confirm: (1) the final judgment was entered correctly and is not subject to appeal; (2) all known junior lienholders were properly served; (3) any Miami-Dade County code enforcement liens were addressed; (4) for hotel or condo-hotel properties, any HOA or condo association liens were resolved.