Understanding Surplus Funds After a Foreclosure in Delaware
When a property sells at a foreclosure sale, sometimes the sale price exceeds the debt, interest, costs, and fees. Under Delaware law, the extra money, known as surplus proceeds, belongs to the former owner and any junior lienholders. To claim these funds, you must follow specific steps set by the Delaware Superior Court.
Step 1: Confirm Surplus Exists
Contact the Sheriff’s Office or review the Superior Court docket. Confirm the sale price, outstanding debt, and surplus amount. Request a certified copy of the Sheriff’s Return of Sale.
Step 2: Prepare Your Petition
Draft a “Petition for Distribution of Surplus Proceeds.” Include:
- Case caption and docket number.
- Sale date and property description.
- Names and addresses of the mortgagor and any junior lienholders.
- Amount of surplus claimed, with a clear calculation.
- A verified statement describing your interest in the funds.
See 10 Del. C. § 5063 for guidance: https://delcode.delaware.gov/title10/c050/sc03/index.html.
Step 3: Attach Required Documents
Include with your petition:
- Certified copy of the Sheriff’s Return of Sale.
- Affidavit or certificate of indebtedness.
- Documentation of any junior lien claims.
Step 4: File the Petition
File your petition with the Prothonotary’s Office at the Delaware Superior Court in the county where the property is located. Pay the civil filing fee (generally $50).
Step 5: Serve Notice on Interested Parties
Within 10 days of filing, serve a copy of the petition on all known lienholders and interested parties. Use certified mail, return receipt requested, to establish proof of service.
Step 6: Attend the Hearing
The Court will schedule a hearing. Bring originals of all supporting documents. Be prepared to explain your claim and answer any questions.
Step 7: Obtain and Enforce the Court Order
If the Court approves the petition, it will issue an order distributing the surplus funds. Present the order to the Prothonotary or Sheriff’s Office to receive payment.
Disclaimer: This article provides general information about Delaware law and is not legal advice. For guidance specific to your situation, consult a qualified attorney.
Helpful Hints
- Verify deadlines: Under 10 Del. C. § 8106, most property claims must be filed within three years: 10 Del. C. § 8106.
- Keep certified copies of all filings and service receipts.
- Obtain foreclosure sale documents early from the Sheriff’s Office.
- Research junior lienholders at the county Recorder of Deeds.
- Consider consulting an attorney if multiple claimants contest the surplus.