Who is Eligible to Obtain the Excess Funds from a Foreclosure Sale?

If you’re going through a home foreclosure, the process can be painful and stressful for you and your family. Whether your foreclosure is happening because of an unpaid mortgage, taxes, or other liens on your home, figuring out the process and what happens after the sale can be challenging. But you also want to ensure that you recover any funds that remain from your home’s sale over the amounts you owe.

Excess Proceeds from a Foreclosure Sale  

If your home sells for a higher price than the liens on your home, there will be excess proceeds or money left over. The lien holder is only entitled to the amount of their lien on your property and the costs of foreclosure and selling the home. If you have additional liens on the property, these excess funds will first pay these junior liens. For example, let’s say your mortgage holder foreclosed because of failure to make your mortgage payments. You owe $50,000 for the outstanding balance of your mortgage and the costs to foreclose and sell it, but you also have a mechanic’s lien on your home for $5,000 not paid to a contractor. If the foreclosure sale of your home nets $150,000, there will be $100,000 in excess funds. Then, the mechanic’s lien holder may recover their $5,000, leaving $95,000 in excess proceeds.   

Note that other issues factor into the amounts that remain, if any.

Eligibility for Excess Funds  

You may be entitled to recover the $95,000 in excess funds from the foreclosure sale of your home. However, you must petition the foreclosure trustee or court to recover these funds. You may be eligible to recover excess funds from a foreclosure sale if:   

1. You were the owner of the property sold or appear on the deed of trust,  
2. Someone assigned the proceeds to you at least 36 days after the excess proceeds are deposited with the court,
3. The home sells for more than the amount of all liens on the home and the cost of foreclosing on and selling the home, and
4. You file your petition within two years after the home’s sale.   
5. 
   

If there is more than one former owner, the court will likely assign the excess proceeds to each former owner “as their interests appear.”   

Hire an Experienced Surplus Funds Recovery Attorney  

If you’re going through a foreclosure sale, you don’t have to figure out how to recover excess funds on your own. Manfred Law can help. The attorneys at Manfred Law have assisted Texas clients (like you) for years. Call us at (713) 547-5460 or contact us online to discuss your case or claim.