Disclaimer: This article is for informational purposes only and does not constitute legal advice. For guidance specific to your situation, consult a qualified Missouri attorney.
Detailed Answer
When a foreclosure sale yields proceeds above the secured debt, the court holds those surplus funds. Other creditors or lienholders may file claims against the surplus if they hold valid, recorded interests in the property. To determine who can claim these funds in Missouri, follow these steps:
1. Review Foreclosure Distribution Rules
Under Missouri law, a court applies sale proceeds first to satisfy foreclosure costs and the foreclosing lienholder’s debt. Any remaining surplus goes to subordinate lienholders in order of priority, then to the former owner. See RSMo § 443.530.
2. Identify Recorded Mortgages and Deeds of Trust
Search the county recorder of deeds online or in person for all mortgages and deeds of trust against the property. Note each lien’s recording date and book/page or instrument number. Earlier-recorded liens take priority over later ones.
3. Check for Judgment Liens
A judgment creditor may establish a lien by filing a transcript of judgment with the recorder. Use the circuit clerk’s case records to find judgments against the homeowner. Confirm lien status under RSMo § 513.070.
4. Search Mechanic’s and Materialmen’s Liens
Contractors and suppliers may file liens under the Construction Trust Fund Act. Search the recorder’s records for notices of mechanic’s liens. Priority often depends on work start date and filing date. See RSMo § 429.100.
5. Investigate Tax Liens
State and local tax liens attach automatically. Contact the county collector or Missouri Department of Revenue to check outstanding property tax or income tax liens. Tax liens typically have senior priority.
6. Determine Priority and Potential Claims
Missouri follows “first in time, first in right.” Rank each recorded lien by its recording or attachment date. After the foreclosing lien, distribute surplus to lienholders in descending priority. Any residual balance goes to the former owner or debtor.
7. Filing a Claim for Surplus Funds
Creditors must file a petition or motion in the foreclosure court to claim surplus. The court sets a deadline—often within one year from sale. Timely filing and proper service to all parties are critical.
Helpful Hints
- Use the county recorder’s online portal to access recorded instruments quickly.
- Order a title search report to spot hidden liens or encumbrances.
- Keep a chronology spreadsheet of lien dates and amounts.
- Confirm deadlines for filing claims in the foreclosure case file.
- Consult local court clerks for procedural forms and fee schedules.