Claims to Surplus Funds Under New Jersey Law
Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult an attorney for advice about your situation.
Detailed Answer
After a New Jersey foreclosure sale, the sheriff deposits the sale proceeds with the court. When the sale price exceeds the outstanding debt, the excess becomes “surplus funds.” Under N.J.S.A. 2A:16-67, any person holding a prior lien, judgment, or other encumbrance on the property may claim those funds.
To determine which creditors or lienholders could have a claim:
- Review the chain of title. Visit the county clerk’s office to examine recorded mortgages, tax liens, and judgment liens.
- Search for judgment liens. Use the New Jersey Judiciary’s Public Access System to find court judgments against the borrower.
- Check UCC financing statements. Access the New Jersey Department of Treasury’s UCC public search for secured parties claiming personal property interests.
- Identify tax liens. Contact the county tax collector’s office to confirm outstanding municipal and state tax liens.
- Locate subordinate mortgages. Search for second or third mortgages recorded after the primary mortgage.
Once you identify potential claimants, follow these steps to file your claim:
- Submit your claim within 30 days. Court Rule 6:52-3 requires claimants to file an affidavit within 30 days after the sheriff’s sale report is filed.
- Attach supporting documents. Include certified copies of mortgages, liens, and judgments.
- Attend the court hearing. The court will allocate surplus funds based on statutory priority: costs, tax liens, mortgages, then other liens and judgments (see N.J.S.A. 2A:16-66 and N.J.S.A. 2A:16-67).
Helpful Hints
- Start your lien search early to allow time for record requests.
- Check multiple jurisdictions; liens may appear in neighboring counties.
- Verify recording dates; earlier liens have higher priority.
- Maintain organized copies of all filings and communications.
- Consider consulting an attorney if claims conflict or involve large sums.