Detailed Answer
Surplus funds arise when a foreclosure sale generates more money than the outstanding loan balance and sale costs. In California, both judicial and nonjudicial sales can yield surplus proceeds. An interested party includes foreclosed borrowers, junior lienholders or judgment creditors. The following steps help you find and claim surplus funds under California law.
Step 1: Identify the Foreclosure Sale Type
Determine if the sale was judicial (court-supervised) or nonjudicial (trustee sale). Judicial foreclosure uses the superior court. Nonjudicial sales occur under a deed of trust outside court. This distinction guides which statute applies.
Step 2: Review Sale Records
Visit the county recorder or clerk where the property is located. Request the trustee’s deed upon sale or the court’s foreclosure sale docket. These public records list sale dates, sale prices and the parties involved.
Step 3: Check for Surplus Funds Notices
For nonjudicial sales, trustees must send a “Notice of Surplus Money” to the last known owner and junior lienholders within 30 days after the sale (Civ. Code § 2924m). If the funds remain unclaimed after 90 days, the trustee must deposit them with the county clerk.
Step 4: Contact the County Clerk
The county clerk holds unclaimed surplus proceeds. Search the clerk’s online database or visit the office in person. Ask for a “Surplus Funds List” or “Unclaimed Property” report. Verify if funds remain for the specific sale.
Step 5: Claim the Funds
To claim surplus funds after a judicial sale, file a motion or claim under California Code of Civil Procedure section 726 (CCP § 726). You must file within one year of the sale. For nonjudicial sales, submit a claim to the county clerk with proof of your interest, such as recorded deeds or lien documents.
Helpful Hints
- Keep copies of all recorded documents and notices.
- Check the county’s unclaimed property website monthly.
- Act quickly—deadlines for claims run from the sale date.
- Follow the county clerk’s instructions for claim forms and fees.
- Consider consulting an attorney if the process becomes complex.