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What Are Surplus Funds

When your real estate is in foreclosure either by a lender or under a tax lien, the Clerk of Superior Court receives bids on your property until bidding expires and the property is sold to the highest bidder on a specified closing date. It is possible that the real estate sells for more than is owed on the deed of trust or on the tax bill. That overage may be surplus funds that are owed to you.

Once the property is sold, there are two indicators of surplus funds remaining: (1) if the amount of the most recent bid is higher than the amount you owe to the lender and (2) if money remains after the proceeds of the sale are applied to the costs, any taxes owed on the property, special assessments, or any other obligations set forth by the mortgage or deed of trust. Any surplus remaining after the application of the proceeds shall be paid to those entitled thereto. Those entitled can include anyone with a lien on your property, obligations set forth by the mortgage or deed of trust, and yourself.

Although you may be entitled to these funds, the Clerk of Superior Court does not automatically send funds following the application of proceeds because the court is not sure who is entitled to these remaining funds. Therefore, you must take action to have the surplus funds returned to you. We can assist you with filing the appropriate paperwork to notify the clerk that you intend to obtain those funds. This process can be difficult because the necessary forms are not readily available in template form to begin these proceedings. However, once initiated, a hearing date is set to allow you, the petitioner, through counsel, to prove that you are entitled to the surplus funds. Evidence to determine ownership is done through searching for titles, liens, and other obligations attached to the property. If everything is in order at the hearing, then the court will order the specified amount in surplus to you within 10-15 business days.

It is important to remember that if you do not take action to retrieve surplus funds from a foreclosure sale, then the remaining funds are held in trust by the clerk of court where the property was sold and later transferred to the department of the treasury. If too much time passes, you may lose the opportunity to receive the funds that may have been entitled to you.

Overall, if a bid exceeds the amount owed to the lender and costs for the sale, then you could be entitled to surplus funds, or the remaining amount. Eldreth Law Firm, PLLC can initiate this process and help you obtain these funds if you wish to pursue your surplus funds. Please do not hesitate to contact our office at (919) 833-5322 for assistance.

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