Detailed Answer
When a non-judicial foreclosure sale occurs in Texas, the property is sold at public auction. If the sale price exceeds the total debt, costs and junior liens, the excess is called surplus funds. Under Tex. Prop. Code § 51.003(c), the trustee must apply sale proceeds first to sale expenses, then to the secured debt, then to subordinate lienholders, and finally remit any remaining balance to the former owner.
1. Review the Trustee’s Deed and Sale Records
Within 20 days after the sale, the trustee files a Trustee’s Deed in the county deed records. That deed shows the sale price. You can access it online or in person at the county clerk’s office.
2. Calculate Total Debt, Fees, and Liens
Gather these figures:
- The outstanding balance of the foreclosed loan.
- Foreclosure sale expenses (trustee fees, advertising, court costs for a judicial foreclosure).
- Amounts due on any subordinate liens recorded before the sale.
3. Compare Sale Proceeds to Total Obligations
If the auction price exceeds the sum of debt, costs and junior liens, the difference equals the surplus. Example: sale price $200,000 minus total obligations $180,000 = $20,000 surplus.
4. Request an Accounting from the Trustee
Under Tex. Prop. Code § 51.003(c), the trustee must apply and account for all proceeds. Send a written request to the trustee or substitute trustee. Ask for a statement of sale proceeds showing how funds were allocated and whether a balance remains.
5. File a Claim or Lawsuit If Funds Are Withheld
If the trustee confirms a surplus but fails to deliver it, you may file a suit in district court for recovery. In a judicial foreclosure, the court handles distribution of surplus under Tex. Prop. Code § 51.0075. In a non-judicial sale, you sue for conversion or unjust enrichment.
Disclaimer
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney in Texas for guidance specific to your situation.
Helpful Hints
- Monitor public sale notices in local newspapers or online trustee websites.
- Keep copies of the deed of trust, notices of sale, and trustee’s deed.
- Check county clerk’s records for lien abstracts and release documents.
- Confirm trustee contact information on the recorded deed or sale notice.
- Consider hiring a title company or attorney to perform lien and surplus searches.
Relevant statute: Tex. Prop. Code § 51.003(c)