Detailed Answer
When a property sells at a foreclosure auction in Washington, any sale proceeds above the amount needed to satisfy the foreclosure judgment become “surplus funds.” Under state law, those surplus funds must go to junior lienholders or other creditors with valid recorded claims before they go to the former owner.
To identify potential claimants, start by reviewing the recorded lien history. Visit the county auditor’s office—either in person or through its online portal—and search the property record by parcel number or legal description. Look for deeds of trust, judgment liens (see RCW 6.17.020), tax liens, contractor liens, and other recorded encumbrances. Note the recording dates and lien amounts.
Next, consult the foreclosure distribution statute (RCW 61.24.100). This statute directs the trustee or sheriff to notify known junior lienholders and gives them a window—typically 30 days—to file a claim. If no response arrives, the trustee can distribute surplus funds to the former owner.
Additionally, check with the county treasurer’s office for unpaid property taxes. Tax liens have priority over other claims and could absorb a large portion of surplus funds if not paid. Finally, consider ordering a title report or hiring a title company to uncover liens recorded in other counties or by less obvious creditors.
Helpful Hints
- Obtain the parcel number or legal description before searching records.
- Use the county auditor’s online portal for up-to-date lien information.
- Review the notice of trustee’s sale for names of junior lienholders.
- Keep track of statutory deadlines under RCW 61.24.100.
- Consider a title company report to spot unrecorded or out-of-county liens.
Disclaimer: This article provides general information about Washington law and is not legal advice. Consult a qualified attorney to address your specific situation.