Surplus funds after foreclosure sale

Surplus funds, also referred to as overage or excess funds, are the funds remaining after a mortgage is paid through a foreclosure auction by the first trust deed lienholder.

The trustee appointed in the foreclosure auction is responsible for disbursing the funds without charging additional fees.

Prior homeowners are notified of possible surplus funds via mail. It is important for you to report a forwarding address with the U.S. Post Office once you vacate the foreclosed property.

If you owned the home prior to the foreclosure sale, and believe you may be entitled to surplus funds, you should communicate with the trustee soon after the auction takes place. IF YOU ARE NOT COMFORTABLE DOING THIS ON YOUR OWN YOU CAN RETAIN AN ATTORNEY OR OTHER PROFESSIONAL PARTY TO MANAGE THIS CLAIM FOR YOU.

The trustee contact information can be found on the Notice of Trustee Sale. A copy of this notice may be retrieved from the local recorder’s office if you misplace it or other.

If there are other third parties that have placed liens against the home that was foreclosed on, called junior lienholders, they are paid in their order of seniority as to the date of recording of their lien or liens against the home. These lienholders must be paid before you the homeowner or the prior homeowner(s) can receive any remaining monies.

You, the homeowner, or the prior homeowners can dispute lienholders in court. The trustee will turn over the surplus funds to the court if a complaint is filed with the courts challenging the validity of the liens that the lienholders have recorded against the property.

Trustees have 30 days from the auction to notify all interested parties (such as second mortgage holders, tax lien holders, or credit card lien holders) of the possible surplus funds via the US mail.

Interested parties including the prior homeowner have 30 days from the notification from the Trustee to assert their claim. Failure to respond within the 30-day deadline can result in losing the rights to receive the funds that you maybe entitled to.

The foreclosure process is public information. Anyone reviewing the public notices will know if there are surplus funds.

Trustees forward surplus funds to the state’s unclaimed property division if they’re not able to contact the prior homeowner(s).

Californians may inquire about unclaimed surplus funds with the California State Controller at (800) 992-4647.