Disclaimer: This article is for educational purposes only and is not legal advice.
What Are Surplus Funds?
When a property in Illinois goes through a foreclosure or judicial sale, the sale proceeds first pay the mortgage and sale costs. Any remaining balance is known as “surplus funds.” Under 735 ILCS 5/15-1508, the court orders distribution of these funds to anyone with a valid lien or judgment against the property.
Who Might Have Claims?
Several parties can stake a claim to surplus funds if they hold a lien or judgment recorded before the foreclosure sale date:
- Junior mortgage lenders
- Judgment creditors (735 ILCS 5/12-101)
- Mechanics’ lienholders (770 ILCS 60/1 et seq.)
- Tax authorities with unpaid property taxes
- Child support lienholders
- Homeowners’ association or condominium assessments
How to Check for Creditors and Lienholders
- Search the Recorder of Deeds: Pull a title report or run a grantor/grantee index search for recorded mortgages, mechanic’s liens and other encumbrances in the county where the property sits.
- Review Circuit Court Records: Use the Illinois Courts case search to find judgments against the homeowner (https://www.illinoiscourts.gov/).
- Check Tax Records: Contact the county tax collector or search online for unpaid property tax certificates.
- Contact the Sheriff or Foreclosure Trustee: Request the surplus funds register in the case docket; it often lists known claimants.
- Order a Title Insurance Commitment: A preliminary title report will flag recorded liens.
Claim Process and Deadlines
Under 735 ILCS 5/15-1508, a lienholder or judgment creditor must file a formal petition in the foreclosure case to claim a share of the surplus. Key steps include:
- Filing a written claim with the clerk of the court that handled the foreclosure sale.
- Attaching certified copies of recorded deeds, mortgages, liens or judgments.
- Notifying all other claimants and the foreclosure purchaser as required by court rules.
- Obtaining a court order apportioning the surplus funds.
Deadlines can be strict. Most claimants must file within six months after the sale distribution order. Failure to act in time may forfeit the right to leftover funds.
Conclusion
Determining who can claim surplus funds starts with identifying all recordings and judgments against the property before the sale. A thorough public-records search and timely filing under 735 ILCS 5/15-1508 help protect your right to recover funds.
Helpful Hints
- Keep a log of all record searches with dates and document numbers.
- Verify lien release documents after a junior mortgage pays off.
- Use an online title-search service to cross-check county data.
- Consider consulting a foreclosure-specialized attorney early in the process.
- Review local court rules for specific filing formats and fees.