What Are Surplus Funds and How Can You Claim Them? If you've ever faced foreclosure or a tax sale on your property, you might not be aware that you could be entitled to money left over after the sale. This extra money is known as surplus funds or surplus money and yes, it's legally yours to claim. Many people miss out on this opportunity simply because they don't know it exists. Let’s break down what surplus funds mean, how the recovery process works, and the steps you can take to claim the money that belongs to you. Understanding Surplus Funds Surplus funds are the extra money left after a property is sold at a foreclosure or tax sale, once all outstanding debts and costs have been covered. When a lender or government entity sells your property to recover a debt (like unpaid mortgage or property taxes), the sale might generate more money than what is actually owed. This surplus doesn’t belong to the bank or the government, it legally belongs to the former property owner or their beneficiaries. Common Sources of Surplus Funds Surplus funds can result from several types of property sale situations:
Mortgage Foreclosures: When a property is sold through foreclosure and the final sale amount is higher than the remaining mortgage debt and associated legal expenses, the excess is considered surplus. Tax Lien or Tax Deed Sales: When a home is sold to recover unpaid taxes and generates excess funds. HOA Foreclosures: If a homeowners’ association forecloses on a property due to unpaid dues.
In each of these cases, the surplus funds are held in a trust or escrow account until the rightful owner steps forward to claim them. Why Most People Don’t Claim Surplus Money It’s estimated that millions of dollars in surplus funds go unclaimed each year. Why? Here are some reasons:
Lack of awareness: Most property owners don’t know this money exists. Legal challenges: Understanding and managing the process can be difficult and take considerable time. Misinformation: Some people assume the government or lender keeps the extra money, which isn’t true in most cases. Moving away: After a foreclosure, many people relocate and miss the official notice about surplus funds.
How to Claim Surplus Funds Claiming your surplus money is possible, but it requires attention to detail and sometimes legal guidance. The typical steps involved in claiming your surplus funds are: 1. Verify Surplus Exists Start by checking with the county court or trustee handling the foreclosure. Public records often show the sale amount and the total debt. 2. File a Petition or Claim This includes:
Evidence of former ownership Proof of identity Documentation of the foreclosure or sale An application to claim the remaining surplus funds.
In some cases, a hearing may be required to determine the rightful claimant. 3. Wait for Processing
After you submit the claim, the court or trustee will examine it. This process may take several weeks to months depending on the jurisdiction and backlog of claims. 4. Receive the Funds Once your claim is approved, the funds will be issued to you through a check or direct bank transfer. No taxes are typically withheld, though it’s always smart to consult a tax professional. Should You Hire a Surplus Funds Recovery Specialist? Surplus funds recovery can be done on your own, but some people choose to work with specialists. These professionals help navigate the paperwork, court processes, and ensure you don’t miss deadlines or legal nuances. However, be cautious:
Work only with licensed professionals or attorneys. Avoid companies that ask for upfront fees (many works on a contingency basis, taking a percentage of recovered funds). Always read contracts carefully before signing.
Time Limits on Surplus Funds Claims There’s usually a statute of limitations on claiming surplus funds. This varies by state but can range from a few months to a few years. If the funds go unclaimed beyond this period, they may be transferred to the state’s unclaimed property division or absorbed into the county’s general fund. So don’t wait, the sooner you act, the better your chances of recovering your surplus money. Final Thoughts Surplus funds offer a valuable financial opportunity for individuals who have gone through a property loss. If you or someone you know has recently been through a foreclosure or tax sale, it’s worth investigating whether surplus money is available. With proper guidance and information, recovering surplus funds can be simple. It’s your rightful money, don’t miss the chance to claim it before the deadline passes. Get in touch today to begin your surplus funds recovery journey.
