How to recover foreclosure surplus funds

Step 1: Find out how the property was foreclosed

A judicial foreclosure goes through a lawsuit, so there is a court case number and the surplus is usually deposited with the court clerk. A non-judicial foreclosure is run by a trustee under a power of sale, and the trustee may hold the surplus, pay it out, or deposit it with the court. Your foreclosure notices, the recorded trustee's deed or the county's court records will tell you which kind it was.

Step 2: Confirm whether there is a surplus

Ask the clerk of court in the county where the sale took place, or the trustee who conducted it, for the report of sale or the record of how the proceeds were distributed. That report shows the sale price, what was paid and whether money remains. Many clerks can look this up by property address or by owner name.

Step 3: Find out the deadline

Deadlines vary. Some states expect claims within weeks or months of the sale. Florida treats surplus still undisbursed one year after the sale as unclaimed and sends it to the state's unclaimed property program.¹ Ask the clerk or trustee about the deadline that applies to your case.

Step 4: Gather documents

Requirements differ, but claims usually ask for some of these:

• A government-issued photo ID
• Proof you owned the property, such as the deed or a tax record
• The case number, sale date or property address
• For heirs: a death certificate and documents showing your right to act for the estate, such as letters of administration
• For lienholders: proof of the lien and the amount owed

Only give identity and account information to the court or office holding the funds, or to someone you have chosen to work with under a written agreement.

Step 5: File the claim

This may be a written claim to a trustee, a form filed with the clerk, or a motion or petition asking the court to release the funds. In North Carolina, for example, the trustee deposits surplus with the clerk of superior court when entitlement is unclear, and claimants then go through the clerk.² Some courts publish their own surplus claim packets.

Step 6: Respond to other claims

Junior lienholders, co-owners or other heirs may file claims for the same money. When that happens, there may be a hearing. This is where many people choose to involve an attorney, because priority between claims is a legal question.

Step 7: Receive the funds

Once the claim is approved or the court orders payment, the clerk or trustee releases the money. Some offices withhold small statutory fees. Florida's clerk, for instance, may withhold a modest amount for each disbursement.¹ Ask a tax professional whether the money has tax consequences for you.

When people choose help

The process is manageable for many people. Others prefer to have it handled because the property was in another county or state, other liens or heirs are involved, the deadline is close, or they simply do not want to relive the foreclosure through paperwork. See how we help.