What surplus funds are
At a sheriff's sale the property goes to the highest bidder. If the winning bid is higher than what was owed on the judgment plus the sheriff's fees and costs, the difference is surplus. The sheriff pays the lender what it is owed and deposits the rest with the Superior Court Trust Fund, where it sits until someone with a right to it asks the court to release it.
In counties with rising home values, surplus is more common than most homeowners expect, and many never learn the money exists.
Who can claim them
The former owner is usually entitled to what remains, but other parties named in the foreclosure may be paid first in order of priority:
- Second mortgages and home equity lines
- Judgment creditors whose liens attached to the property
- Condominium or homeowners association liens
- Tax and municipal liens that were not paid at the sale
- The former owner, or the owner's estate or heirs, for whatever remains
How the money is recovered
Surplus funds are released only by court order. David files a motion in the foreclosure case, on notice to every party who was named, showing the amount on deposit and why you are entitled to it. If no one with priority objects, the court signs an order directing the Trust Fund to pay you.
There is no need to pay a percentage to a company that found your name on a list. The motion is a routine court filing, and a flat or hourly legal fee is almost always far less than a finder's contingency.
Beware of surplus funds finders
After a sale with surplus, former owners often receive letters and calls from companies offering to recover their money for a large share of it, sometimes a third or more. Before you sign anything, find out how much is on deposit and what the legal work would cost. A free consultation will tell you both.
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