How to File a Special Proceeding to Recover Foreclosure Surplus Funds in Georgia

Short answer: In Georgia you typically must file a special proceeding (a petition in the Superior Court where the foreclosure sale occurred) asking the court to order distribution of surplus sale proceeds. The petition should identify the sale, show the amount of the surplus, list and notify all interested parties, attach supporting documents (sale certificate, security deed, payoff figures), and request an order directing the clerk to release the funds. Below are step-by-step actions, practical tips, and links to the Georgia code and court resources to help you prepare.

Detailed Answer

1. Confirm that surplus funds exist and where they are held

After a foreclosure sale, any amount left over after paying the foreclosing creditor’s debt, costs, and senior liens is a surplus (sometimes called overage). Surplus proceeds are usually held by the clerk of the Superior Court of the county where the sale occurred. Start by obtaining the foreclosure sale paperwork (the sale certificate or return of sale) and contact the clerk’s office to confirm the amount being held and the clerk’s procedure for distribution.

2. Identify who has a claim to the surplus

Common claimants include the former owner (mortgagor/borrower), any junior lienholders (second mortgages, judgment creditors, tax liens), and sometimes successor owners or heirs. You should review the foreclosure file and the property’s title chain to build a list of potential claimants to name and notify in your petition.

3. Prepare the special proceeding petition (what to include)

The petition is usually filed in Superior Court in the county where the property is located. Typical contents:

• Caption and case heading identifying the court and parties.
• Clear statement that this is a special proceeding to obtain distribution of surplus foreclosure funds.
• Detailed factual recital: date of foreclosure sale, property description, foreclosing party, purchaser at sale, gross sale price, amounts applied to debts/costs, and the precise amount of surplus held by the clerk.
• Legal basis for relief and request for an order directing the clerk to pay the surplus to the petitioner (cite applicable Georgia law).
• List of known interested parties and their addresses (lenders, junior lienholders, purchaser, etc.).
• Affidavits and supporting documents: copy of the security deed, the recorded power of sale notice, the sale certificate/return, payoff statements, assignments, and any proof of your status (deed, affidavit of ownership, ID).
• Proposed order for the judge to sign, directing distribution of funds.

4. File the petition and pay filing fees

File the petition in the Superior Court clerk’s office for the county where the property sits. The clerk will assign a case number and advise on local filing fees, civil filing requirements, and whether a hearing will be scheduled. Ask the clerk for any local forms or procedures they require for surplus distribution petitions.

5. Serve (notify) all interested parties

Georgia courts expect you to serve or otherwise notify all known claimants to the funds. Typical required service recipients include:

• The purchaser at the foreclosure sale (often the foreclosing lender).
• Any junior lienholders shown in the records.
• Other parties who might claim the funds (judgment creditors, taxing authorities, heirs).

If a claimant’s address is unknown, the court may require substituted service or publication. Follow the Superior Court’s local rules for service and proof of service.

6. Attend the hearing and present proof

The court will typically set a hearing. At the hearing you must prove your entitlement to the funds: present documents showing the surplus amount, your priority (why you are entitled to payment before others), and any releases or payoff figures. The judge will decide distribution based on the evidence and relative priorities of claimants.

7. Obtain a court order and have the clerk disburse funds

If the judge rules in your favor, the court issues an order directing the clerk to disburse the funds. Present the signed order and any forms the clerk requires (identification, IRS vendor forms if applicable) to the clerk’s office so the clerk can issue payment. The clerk may hold funds until any appeals period expires or until all procedural conditions are met.

Statutes and where to look

Georgia’s provisions governing foreclosure sales, notice, and distributions are found in the Official Code of Georgia Annotated (O.C.G.A.). For help finding applicable sections, start at the Georgia General Assembly’s Georgia Code landing page: https://www.legis.ga.gov/georgia-code. Search within Title 44 (Property) and related civil procedure provisions to locate statutes that address sale procedure and distribution of proceeds. Also check Superior Court local rules for the county where the sale occurred.

Timing and practical considerations

• Act quickly. Claims to surplus funds can become contested and may be affected by statutes of limitation or local procedural rules.
• Collect and attach documentary proof (recorded deeds, sale certificate, payoff statements). Courts rely on records and clear chain-of-title documentation.
• If multiple claimants exist, expect a contested hearing. The court will allocate the surplus according to priority and evidence.
• If you are unclear how to prove priority (for example, whether your lien is truly junior or senior), consult an attorney experienced in Georgia foreclosure and real estate law.

Helpful Hints

• Start at the clerk’s office. Ask for the foreclosure file, the sale certificate/return, and the exact amount held as surplus.
• Make a list of all recorded liens and judgments against the property before and after the foreclosure date; this helps identify necessary parties to serve.
• Attach certified copies of recorded documents (deed to secure debt, assignments) to your petition whenever possible.
• Request the clerk’s preferred format for a proposed order. A clean, court-ready proposed order speeds processing.
• If an interested party cannot be located, ask the court about substituted service or publication rather than guessing; follow pub­lication rules closely.
• Be prepared for the court to require identification and possibly an affidavit about your claim before releasing funds.
• If there is a dispute among multiple claimants, a lawyer can file and prosecute the claim and may avoid mistakes that delay distribution.
• If funds will be paid to an estate or into a trust, bring certified letters of administration or trust documents to the clerk when collecting funds.

Next steps: Contact the Superior Court clerk in the county where the foreclosure sale took place to learn local filing requirements and fees. If you want to reduce risk or the other claimants dispute the funds, consult a Georgia attorney who handles foreclosure surplus and real property litigation.

Disclaimer: This article explains general procedural steps under Georgia law and is for educational purposes only. It is not legal advice. For advice about your particular situation, contact a licensed Georgia attorney.