How to claim surplus funds

Claiming Surplus Funds in North Carolina

Have you received a letter notifying you that a Clerk of Court is holding surplus funds for you?

When a property is foreclosed upon, generally because of a defaulted mortgage (sometimes in the event of unpaid property taxes or homeowner’s association fees), it is sold to the highest bidder at a public auction in the county which the property is located. If the final sales price of the property at this auction exceeds the amount(s) owed causing the initial foreclosure, those leftover funds are referred to as “surplus funds.”If there is a surplus (or “excess proceeds”) from the property auction, they are first used to satisfy any existing legal claims against the property (*claimant priority is dictated by law). Generally, the first priority is to satisfy the outstanding legal claims against the property and is typically paid in the following order:
      • the mortgage debt
      • any property taxes due
      • other judgments or liens (legal claims)
      • any attorneys involved
If there are remaining funds leftover once all the claims against the property are paid, these funds belong to the property owner(s) (who owned the property at the time it was foreclosed).If surplus (or excess) funds exist after the property auction (and, of course, after those priority legal claims listed above are paid), the balance is then transferred to and held by the local Clerk of Court, awaiting a claim by anyone legally entitled to them. The local county Clerk of Court will attempt to notify the original owners of the property of their potential claim to the funds, but they are frequently unsuccessful since the owners no longer reside at the last known address (the foreclosed/auctioned property). If you have received a letter notifying you that you may have a claim to surplus funds, The North Carolina General Statutes requires a “special proceeding” must be instituted before the Clerk of the Superior Court to claim them. What this means is that the Clerk of the Special Proceedings Division of the Superior Court in the local county that the property is in, holds a hearing to ensure the person claiming the funds is, in fact, legally entitled to receive them.

CLAIMING SURPLUS FUNDS IN COURT:

In order to claim surplus funds, one has to file a Petition for Surplus Funds, explaining (or proving) to the court how you are entitled to those funds. Unfortunately, there are no published court forms available for this process in the State of North Carolina.

Generally speaking, the claimant needs to engage an attorney to assist in the drafting and filing of the petition and represent them in a Special Proceedings Hearing held by the clerk.

So, what does it cost to claim Surplus Funds?

The costs associated with claiming surplus funds to which you may be entitled generally includes (but is not limited to):
      • A FILING FEE:Generally, the filing fee is $120.00 (but may differ between counties)
      • THE ATTORNEY FEES:the attorney fees for the lawyer representing you, often on a contingency basis
      • THE COST OF ‘SERVICE’:the cost of service is the associated costs to notify any other legally ‘interested parties’ who may have a claim or dispute regarding these funds. This is done by the Sherriff’s office.
      • A LIMITED TITLE SEARCH:a limited title search of your property to ensure that there are no other outstanding claims to be paid (generally between $150-250)
Counties all across the state of North Carolina have recently been sending letters of notification regarding Surplus Funds – some from foreclosures as long as two or more years ago. If you have received a notice that you may have a claim to Surplus Funds, you should contact an attorney experienced with the process so that they can discuss the process of claiming the money being held by the State or County.

The process of claiming Surplus Funds is not well-known, so be sure to find an attorney who has experience with this process.

Our lawyers have experience claiming surplus funds for residents in all counties of North Carolina. If you’ve received a letter stating you may have surplus funds, we can help!

Have you received a letter saying you may have
a claim to Surplus Funds?

We can help you claim it!

Drop us a quick message below and we’ll help you get started!

CONTACT The Walls Law Group 919-647-9599 wallslawnc.com

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2020-04-18