Detailed Answer — How to recover surplus funds from a foreclosure sale in Kentucky
When a Kentucky foreclosure sale yields more money than the total amount owed (mortgages, liens, fees, and court costs), the excess — called the surplus (or overplus) — belongs to whoever is legally entitled to it, usually the former owner or other lienholders with higher priority. Recovering that surplus requires filing a special proceeding in the circuit court that conducted the foreclosure sale and following court rules and statutory requirements. The process below explains the common steps, the documents you will need, how notice and service typically work, and what to expect at a hearing.
Legal reference: For statutes and local procedure, see the Kentucky Revised Statutes and the Kentucky Court of Justice resources at the Kentucky Legislature and court websites: Kentucky Revised Statutes (KRS) and Kentucky Court of Justice. Your circuit court clerk can point you to the specific KRS sections and local practice rules that apply in the county where the sale occurred.
Step-by-step filing and claim process
- Confirm that a surplus exists and identify the court file. Visit the circuit court clerk’s office where the foreclosure case was handled. Get a certified copy of: the judgment/order of sale, the master commissioner’s report of sale, the confirmation of sale (if entered), and any distribution or accounting filed by the clerk or master commissioner. Those documents show whether the sale produced funds beyond the amounts distributed and who was listed to receive payment.
- Determine who may claim the surplus. Priority usually goes to costs of sale and senior lienholders; any remaining funds commonly belong to the former owner (the mortgagor) or to junior lienholders in priority order. Check the foreclosure case record to see which claims were paid and which remain unpaid. If you are unsure about priority or competing claims, the court will decide after notice and hearing.
- Prepare a written petition or notice for a special proceeding. In Kentucky you typically file a petition (sometimes called a petition for distribution of surplus or a special proceeding notice) in the same circuit court case. Your petition should include: the foreclosure case number; your name and contact information; your relationship to the property (owner, lienholder, etc.); the sale date and the amount of the surplus you seek; and a short statement of the facts and documents that support your claim (copy of deed, mortgage, judgment, or payoff documentation). Attach copies of the sale documents obtained from the clerk.
- File the petition with the circuit court clerk and pay filing fees. File the petition or notice in the foreclosure case file and pay any required filing fee. Ask the clerk how the court handles special proceedings for surplus funds in that county and whether the county requires a particular form or caption.
- Serve notice on all interested parties. Kentucky procedure generally requires providing notice to all interested parties (the purchaser at sale, the master commissioner, all lienholders of record, and any known parties of interest). The clerk or local rules will tell you which parties must be served and by what method (personal service, certified mail, or service by the master commissioner). Keep proof of service (signed return receipts, sheriff’s return, or affidavit of service).
- Ask the court for a hearing or request entry on the court’s calendar. The court will schedule a hearing if there are contested claims or often will enter an order after an uncontested petition and proper notice. Prepare to submit evidence at the hearing — certified sale records, lien documents, payoff statements, and identification proving your interest in the property.
- Obtain a court order directing distribution of the surplus. If the court finds you are entitled to the surplus, it will enter an order directing the clerk or master commissioner to disburse the funds. The clerk will typically require identification and may require you to execute any required releases before paying funds.
- If there is a dispute, follow the court’s contested-proceedings process. If another party claims the funds, the court will resolve competing claims at a contested hearing. Be prepared for written responses from other parties, potential discovery, and possibly a trial-like hearing where the court will determine priorities and entitlement.
Typical documents and evidence to gather
- Certified copy of the foreclosure judgment/order of sale and the confirmation of sale (court file).
- Master commissioner’s report of sale and any distribution accounting.
- Title documents showing your ownership or lien (deed, mortgage, assignment of mortgage).
- Payoff letters, liens, judgments, IRS or county tax lien statements, and any recorded releases.
- Government-issued photo ID and proof of current address.
Who can help: Circuit court clerks can explain local filing requirements and give you the case file. An attorney experienced in Kentucky foreclosure law can help prepare the petition, handle service and contested hearings, and protect your priority rights — especially when multiple claimants or tax liens exist.
Important note on timing: Act promptly. While statutes and local rules control deadlines, delay makes it harder to gather evidence and increases the chance that other claimants assert rights. The clerk can tell you if the court has any local deadlines for filing petitions in the foreclosure case.
This is not legal advice. The steps above explain common practice in Kentucky but do not replace consultation with an attorney. Rules and statutory requirements can vary by county and by case facts.
Helpful Hints — Practical tips to simplify recovery of surplus funds
- Start at the circuit court clerk’s office for the foreclosure case file — that file contains the sale records you need.
- Make certified copies of the sale documents to attach to your petition.
- Prepare a clear, short petition that states why you are entitled to the funds and list every lien or person with a known interest.
- Get proof of service and file it with the court immediately after serving interested parties.
- Check for tax liens and municipal liens; these sometimes supersede other claims and can reduce or eliminate surplus funds.
- If you are the former owner, bring photo ID, a recorded deed (or evidence of ownership), and proof of forwarding address for disbursement.
- If multiple claimants exist, consider hiring counsel early — contested surplus proceedings often require litigation skills and title analysis.
- Ask the clerk whether the county uses any local forms or requires the petition to be titled in a particular way (some counties have standard forms).
- Keep copies of everything filed and proof of any payments or releases — the court will expect clear documentation.
- When in doubt, consult a Kentucky-licensed attorney experienced in foreclosures and distribution of sale proceeds.
Where to find more information
- Circuit court clerk in the county where the foreclosure case was filed.
- Kentucky Revised Statutes and state court resources: https://apps.legislature.ky.gov/statutes/
- Kentucky Court of Justice general information and self-help pages: https://kycourts.gov/