Disclaimer: This article is for informational purposes only and does not constitute legal advice. Always consult a qualified attorney regarding your specific situation.
Detailed Answer
After a foreclosure sale in Utah, any surplus funds remain once the sale proceeds pay the senior mortgage and foreclosure costs. Utah Code §57-1-24 governs how courts handle and distribute these leftover funds. Creditors and lienholders with recorded interests may file claims to recover their share based on lien priority and statutory deadlines.
To determine whether other creditors or lienholders could claim surplus funds, follow these key steps under Utah law:
1. Identify All Recorded Liens
Search the county recorder’s office for any liens or encumbrances on the property. Common liens include:
- Junior mortgages or deeds of trust.
- Mechanic’s liens for unpaid contractors.
- Judgment liens filed under Utah Code §78B-6-901.
- IRS tax liens.
2. Verify Lien Priority
Utah uses a first-in-time, first-in-right system. A lien recorded earlier generally takes priority over later liens. Senior liens get paid first; any remaining balance goes to junior lienholders in order of their recording dates.
3. Check Statutory Claim Deadlines
Under Utah Code §57-1-24, a person with a subordinate lien or interest must apply to the court clerk within 120 days after the foreclosure sale date. Late applications may forfeit the right to claim surplus funds.
4. Review Notice Requirements
The clerk must mail notice to each recorded lienholder whose address appears in county records. Proper service ensures lienholders know the deadline to file a claim.
5. Calculate Potential Recovery
Once you gather lien amounts, subtract senior lien balances and sale expenses from the sale price. The remaining surplus divides among approved lienholders according to priority and claim amounts.
Utah Statutes Governing Creditor Claims
- Utah Code §57-1-24: Distribution of surplus funds after foreclosure.
- Utah Code §78B-6-901: Creation of judgment liens by filing abstracts.
Next Steps
Compile a complete lien search report. Confirm recording dates and amounts owed. File your claim with the court clerk before the statutory deadline. If multiple creditors compete, the court clerk allocates funds by lien priority. For complex cases, consider involving a real estate attorney or title company.
Helpful Hints
- Order a title report to uncover all recorded interests.
- Review county recorder filings for recent or unrecorded liens.
- Note each lien’s recording date to establish priority.
- Track the foreclosure sale date to calculate the 120-day claim deadline.
- Keep copies of notices and filing receipts.
- Reach out early if you need additional time or have missing contact info.