How to Claim Surplus Funds After a Foreclosure Sale
By Cody McCaughan, Esq.
Going through the foreclosure process could be disheartening and oftentimes difficult, thus it is common for those involved to not be aware of surplus funds. If you think there may be surplus funds after a foreclosure sale on your property, it is important to file a claim AS SOON AS POSSIBLE. After only a few months the court may claim the funds or award them to another lienholder.
What are surplus funds?
When a property is sold at a foreclosure auction there is the possibility of surplus funds. Surplus funds are the extra money gained from a foreclosure sale. Sometimes properties will sell at auction for more than what is owed on the lien that led to foreclosure. For example, a property may have a $100,000 lien on it, and it may sell at auction for $150,000. The extra $50,000 recovered from the sale of the property is payable to the original owner after accounting for sums that may be owed to junior lienholders.
Am I entitled to surplus funds?
Surplus funds are usually owed to the person whose property was foreclosed. Generally, after the foreclosure sale the original owner receives the funds. It is common for other creditors to attempt to collect the surplus funds. In such cases, you may only receive the funds after certain debts are discounted. It is best to have an attorney walk you through the claim process to ensure you recover as much as is truly owed to you, as other creditors may try to claim more than they are owed, leaving you with less or nothing at all.
How do I claim surplus funds?
In order to file a claim, first, you must be able prove ownership of the recently foreclosed home, the last deed giving title is usually sufficient. Then, you have to verify the surplus funds to determine the amount and take account for the possible claims of other lienholders. Finally, you must file a claim with the court for the recovery of your surplus funds. The proper legal procedure must be followed and monitored to properly file the claim and receive the full amount you are owed, so it is best to consult with a real estate attorney before beginning the process.
After a foreclosure, surplus funds can be just what you need to get your life back on track. It is important to act quickly and our firm can help you claim your funds. Contact us for a no-charge consultation, including a quote for attorney representation and document preparation, contact us at (305) 928-4190.