Disclaimer: This is not legal advice. It provides general information about Delaware law and procedures. Consult a qualified attorney for advice on your specific situation.
Detailed Answer
1. Understand Delaware Foreclosure Sales
Delaware uses a judicial foreclosure process. After a lender obtains a judgment, the sheriff conducts a sale of the property at public auction. If the winning bid exceeds the total amount owed (mortgage balance, interest, costs, and fees), the excess becomes “surplus funds.”
2. Know Your Rights to Surplus Funds
Surplus funds belong to the former owner or other parties with recorded interests (e.g., junior lienholders). If you claim surplus funds, you must file a motion in the Superior Court where the sale occurred. Delaware law governs the distribution under Title 10 of the Delaware Code.
3. Review Court Records
Visit the clerk’s office of the Delaware Superior Court in the county where the foreclosure took place. Request the case file and the sheriff’s return. Look for the “Report of Sale” and the court’s order approving the sale. These documents list the sale price, amounts applied to debts, and any surplus.
4. Check the Public Notice
After the sale, the sheriff publishes a notice of sale and posts details online. That notice often states whether surplus funds exist. You can search the Delaware Courts public portal or sign up for electronic notices via the Delaware Prothonotary System.
5. Calculate Potential Surplus Funds
To estimate surplus, subtract the total debt and costs from the sale proceeds. For example, if the property sells for $200,000 and the debt plus costs equal $180,000, the surplus is $20,000. Always verify figures in the official Report of Sale.
6. File a Claim for Surplus Funds
Under 10 Del. C. § 5063 (Surplus Funds; Deposit and Distribution), interested parties must petition the court within one year after the sale. The petition should include:
- Your name and address.
- Case number and property address.
- Proof of interest (e.g., mortgage, lien, or title documents).
The court will schedule a hearing. If no other valid claims arise, the court orders the clerk to disburse the surplus to you.
7. Beware of Deadlines and Competing Claims
Missing the one-year deadline bars your right to surplus funds. Junior lienholders, judgment creditors, or taxing authorities may also file competing petitions. Priority follows the order of recorded liens.
Helpful Hints
- Search the Delaware Superior Court online docket for foreclosure case numbers.
- Request certified copies of the sheriff’s Report of Sale and payment ledger.
- Monitor public notices in the newspaper where the property is located.
- Consult a real estate attorney if competing claimants emerge.
- Keep records of all filings, receipts, and service of process.