Detailed Answer
When a foreclosure sale in Alabama generates more than the outstanding debt plus costs, state law requires that the excess, or “surplus” funds, return to the party legally entitled to them. Both judicial foreclosures (sales ordered by a court) and non-judicial foreclosures (sales by power of sale) trigger these rules.
1. Identify the Type of Foreclosure
First, determine whether the sale was judicial or non-judicial. Review the original mortgage or deed of trust and foreclosure notices. Judicial foreclosures follow Ala. Code § 6-5-250; non-judicial power-of-sale foreclosures follow Ala. Code § 35-10-46.
2. Review the Report or Certificate of Sale
After a judicial sale, the purchaser deposits any surplus with the circuit court clerk. In a power-of-sale foreclosure, the mortgagee handles distribution under statute but may route funds through the clerk. Obtain and read the “Report of Sale” or “Certificate of Sale and Distribution” filed with the clerk. This document shows sale proceeds, amounts applied to the debt, and any leftover funds.
3. Search Clerk Records
Visit the Circuit Court Clerk’s office in the county where the property lies. Request the foreclosure case file by case number or party name. Look for entries labeled “Funds on Deposit” or “Surplus Funds.” Some Alabama counties offer online case search portals—check the county’s website.
4. Make a Formal Demand
If you identify unclaimed surplus funds, file a written demand with the clerk within the statutory window. For non-judicial foreclosures, the mortgagor or assignee must demand payment within six months after sale under § 35-10-46. For judicial foreclosures, consult local court rules (often within three to six months). Include proof of your legal interest, such as a mortgage release or assignment.
5. Track the Payment
After the clerk approves your demand, they will issue payment, usually after adding a statutory commission. If no demand arises before the deadline, the funds escheat to the county treasury.
Helpful Hints
- Collect the foreclosure case number, sale date, and property address before visiting the courthouse.
- Use online public records portals where available to save time.
- Keep copies of all written demands and proof of delivery to the clerk.
- Note deadlines carefully; missing them may forfeit your claim.
- Consider consulting a real estate attorney if the case file is complex or disputed.