Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Detailed Answer
Under Texas law, a foreclosure sale may generate surplus funds when the sale price exceeds the total debt and costs. The trustee must deposit that surplus with the county clerk, who holds it for two years. To claim these funds, an interested party—including a former owner, junior lienholder, or other claimant—must file a petition in the appropriate county court at law. Follow these steps:
- Confirm Surplus Deposit. Contact the county clerk’s office where the foreclosure occurred. Request a copy of the certificate of deposit and verify the amount of surplus funds on record. Under Texas Property Code § 51.003(e), the trustee must deposit any surplus with the clerk. Tex. Prop. Code § 51.003(e).
- Establish Your Interest. Gather documents showing your right to the surplus: deeds, lien assignments, promissory notes, payoff statements or proof of equity. Texas courts award surplus to parties with superior legal claims.
- Prepare the Petition. Draft a petition in the county court at law where the funds are held. Include:
- The case style: name of the foreclosure trustee sale.
- A statement of facts: date of sale, amount of surplus, your interest.
- A request for an order directing the clerk to release funds to you.
- File and Serve. File the petition with the county clerk and pay the statutory filing fee. Serve all interested parties, including senior lienholders and the trustee, according to Texas Rules of Civil Procedure.
- Notice and Hearing. After service, the court will set a hearing date. Give notice as required by court rules. The judge will review competing claims and hear evidence.
- Attend the Hearing. Present your evidence: certified copies of deeds, promissory notes, payoff statements. Respond to any challenges from other claimants.
- Obtain a Court Order. If the court finds your claim valid, it will issue an order directing the county clerk to disburse the surplus. Texas Property Code § 51.003(g) allows the clerk to pay claimants after a court determination. Tex. Prop. Code § 51.003(g).
- Collect Your Funds. Submit the certified court order to the county clerk. The clerk will release the funds to you according to the order.
Helpful Hints
- Check deadlines: the clerk holds surplus for two years from the deposit date.
- Verify the exact fund amount on the certificate of deposit.
- Compile clear chain-of-title documentation to prove your interest.
- Follow local court rules for petition formatting and service.
- Keep copies of all filings and service affidavits.
- Attend hearings well prepared with organized exhibits.
- Consult an attorney if multiple claimants dispute the funds.