Short answer
Usually, lienholders whose liens were wiped out by the foreclosure are paid first, in order of priority, and the former owner of record receives what remains. If the owner has died, the estate or heirs may claim instead. Each state sets its own rules.
Former owners
The owner of record is typically the person entitled to whatever remains after valid liens are paid. Florida's statute states this directly: it presumes the owner of record on the date the lis pendens was filed is entitled to the surplus after subordinate lienholders who filed timely claims are paid.1
If a property had more than one owner, such as spouses or relatives on the deed, each may have a share, and the court may require all of them to take part in the claim.
Junior lienholders
A foreclosure by the first mortgage lender usually wipes out liens recorded after it. Those lienholders lose their claim on the property but may claim the surplus instead. Common examples:
- Second mortgages and home equity lines of credit
- Homeowners association or condominium liens
- Judgment liens from lawsuits
- Some tax or government liens, depending on the state
This is why a large sale price does not always mean a large surplus for the owner. A $50,000 surplus with a $35,000 second mortgage may leave $15,000 or less for the former owner.
How lien priority is decided
Priority generally follows the order liens were recorded, with exceptions some states create for taxes, certain association liens and other charges. Lienholders usually have to file their own claims. If they do not, some states allow the surplus to pass to the owner. When claims conflict, the court decides.
Heirs and estates
When the former owner has died, the right to the surplus usually passes through the estate. North Carolina, for example, directs the surplus to the clerk of superior court when the owner has died and there is no qualified personal representative.2 Read our guide for heirs and families.
Who usually cannot claim
- Tenants who rented the property
- The foreclosing lender, beyond what it is owed
- Anyone holding only a letter or list that mentions the property
Someone who has bought or been assigned the owner's claim may also have to prove their right to it. Florida requires assignees to prove entitlement and sets strict conditions on assignments.1
Sources
- Fla. Stat. §§ 45.032 and 45.033. Checked October 12, 2026.
- N.C. Gen. Stat. § 45-21.31(b). Checked October 12, 2026.
This page explains general concepts and is not legal advice. Laws differ by state and change over time.