Recovering Foreclosure Surplus Funds in Massachusetts: Step-by-Step Guide

Disclaimer: This information is educational only and not legal advice. I am not a lawyer. For help with a specific case, consult a licensed Massachusetts attorney.

Detailed Answer — How to file a special proceeding to recover foreclosure surplus funds in Massachusetts

When a foreclosure sale produces more money than is needed to pay the mortgage, costs, and any higher-priority liens, the extra money (the “surplus”) generally belongs to the former owner or other entitled claimants. In Massachusetts, recovering those surplus funds typically requires filing a claim in the court that handled the foreclosure sale (for example, Land Court, Superior Court, or Housing Court) or following the court’s post-sale procedure. See Massachusetts General Laws, Chapter 244 (Foreclosure of Mortgages) for the statutory framework: M.G.L. c.244.

1. Confirm whether there is a surplus and how much.

   Start at the registry of deeds and review the foreclosure sale record. The foreclosure sale report or certificate of sale will show the sale price. Subtract the mortgage balance, foreclosure costs, and any senior liens to estimate the surplus amount. If you are unsure how the math was done, the foreclosure docket in the court file usually contains the sale report and accounting.

2. Determine the correct court and docket number.

   Locate the original foreclosure case file and note the court (e.g., Superior Court or Land Court) and docket number. The court that entered the foreclosure judgment or supervised the sale usually retains jurisdiction over distribution of sale proceeds. You will file your special proceeding or petition there.

3. Gather supporting documents.

   Common documents claimants must submit include:

   • Photo ID and proof of current address;
   • Deed, title search, or proof you were the owner at the time of sale;
   • Copy of the foreclosure judgment, certificate of sale, or sale report from the court or registry of deeds;
   • Payoff statements, evidence of mortgage satisfaction, and any documents showing other liens or claims;
   • Affidavit or declaration describing your relationship to the property and why you are entitled to the surplus.
4. Prepare and file a petition or motion for distribution of surplus.

   Prepare a written petition (often titled “Petition for Distribution of Surplus Proceeds” or “Petition in a Special Proceeding”) that:

   • Identifies the foreclosure case by caption and docket number;
   • States who you are and why you claim the surplus (owner, co-owner, judgment creditor, etc.);
   • Sets out the facts and the exact amount claimed;
   • Includes sworn statements and attaches supporting exhibits;
   • Requests the court to order payment of the surplus to you or to hold a hearing to determine rightful recipients.

   File the petition with the clerk of the court that handled the foreclosure and pay any applicable filing fee. Court clerks can provide local rules about captioning and filing procedures.

5. Serve notice on interested parties.

   Massachusetts courts require that all parties with a possible interest in the surplus receive notice — typically the foreclosing mortgagee (plaintiff), the purchaser at the sale, junior lienholders, and others listed on the foreclosure docket. Proper service lets those parties object or make competing claims. The court’s clerk or local rules will explain who must be served and how (e.g., certified mail, personal service).

6. Attend the hearing and respond to objections.

   The court will schedule a hearing if multiple claims exist or if the judge needs more information. Be prepared to present documentary evidence and sworn testimony. The court will decide who is entitled to the funds and in what amounts. If the court grants your petition, it will issue an order directing distribution of the surplus.

7. Receive the funds or follow the court’s distribution order.

   The court’s order will explain how the funds will be paid (for example, by the court clerk, trustee, or county treasurer). You may need to provide a release, an IRS form for payment, or a receipted claim form before the funds are released. If the court awards the surplus to you, follow the clerk’s instructions for collection.

8. Be aware of competing claims and outside factors.

   The surplus can be claimed by others with superior legal rights (e.g., prior secured creditors, tax authorities, judgment lienholders) or may be affected by bankruptcy proceedings. Claims often trigger disputes; the court resolves competing interests according to Massachusetts law and priority rules. See M.G.L. c.244 for the statutory structure governing foreclosure sales and distributions.

Where to find statutes and court help

Massachusetts General Laws (Chapter 244 and related provisions) explain foreclosure procedures and the distribution of sale proceeds: M.G.L. c.244. For court-specific filing procedures, contact the clerk’s office of the court that handled the foreclosure or visit the Massachusetts court system website: Massachusetts Court System.

Helpful Hints

• Act quickly. Surplus claims can be time-sensitive and may be simplified the sooner you act after the sale.
• Obtain certified copies. Get certified copies of the foreclosure judgment, certificate of sale, and registry of deeds recordings to support your claim.
• Identify all possible claimants. Prepare to notify the foreclosing bank, purchaser, junior lienholders, and any known judgment lienholders.
• Use clear evidence of ownership. Deeds, tax bills, utility records, and affidavits can help prove your prior ownership or interest.
• Expect objections. Prepare written responses and evidence to counter competing claims (e.g., other creditors, recorded liens).
• Consider a lawyer for contested cases. If other parties dispute your claim, an attorney can draft pleadings, manage service, and represent you at hearing.
• Watch for bankruptcy or tax liens. A bankruptcy filing or outstanding tax lien may affect entitlement to surplus funds.
• Check for local forms. Some counties or courts provide sample petitions or local rules — ask the clerk or check the court’s website first.
• Keep copies of everything. Maintain a complete file of filings, proofs of service, notices, and court orders.

If you want, I can outline a sample petition checklist or draft a plain-language petition template you could adapt for filing in the appropriate Massachusetts court.