How To Claim Surplus Funds From Foreclosure

Prior blog posts accept discussed the concept of surplus monies in foreclosure proceedings.  Surplus funds occur when a holding is sold at a public foreclosure auction, and the amount bid exceeds the amount of debt owed on the property.  For instance, a homeowner defaults on his mortgage, and owes $300,000.00 to his lender.  After all-encompassing legal proceedings, the business firm is sold at public sale, and the winning bid is $400,000.00.  There is therefore an "extra" $100,000.00 now available.  Does the defaulting homeowner have a correct to these surplus funds?

The answer is aye.  In general, subject to other liens, the possessor of the property which is sold at auction has the correct to collect the surplus funds if the house is sold for more the foreclosing creditor (usually a banking concern) is owed.  How does the former owner of the property get about collecting these funds?  We would propose that any homeowner who may exist in such a position to appoint experienced counsel to represent his interests.  The reason is that collecting surplus funds requires knowledge of the Court organisation and the procedures necessary to let the funds to be disbursed.

When a property is sold at auction, a Courtroom-appointed Referee is responsible for collecting the funds from the winning bidder, and paying off the creditor who brought the foreclosure action.  Once this is done, the Referee will file a report in the appropriate Court, showing an accounting of the sums received from the sale, and the disbursement of aforementioned.  The report will besides evidence whether at that place were surplus funds; that is, whether the winning bid exceeded the corporeality owed to the foreclosing entity.  If that is the instance, the Referee volition deposit the surplus funds with the Section of Finance in the County in which the foreclosure took place.

One time the funds are deposited with the appropriate Department, they will remain on deposit until a Court gild is obtained allowing the funds to be disbursed.  Counsel familiar with these procedures will file the appropriate motion or motions with the Courtroom to request that a Judge allow disbursement of the funds.  Yet, not every surplus funds situation is straightforward.  There may be other creditors, such equally 2nd mortgage holders, tax lienors, condominiums with a common charge lien, and the like.  Such creditors may have already filed liens with the Court evidencing their merits to whatsoever surplus funds.

It is the chore of the chaser handling the recovery of the funds to notify any other creditors who take appeared in the foreclosure activity that disbursement of the surplus funds is being sought.  In such situations, the parties may enter into an agreement delineating the amount to be received by each creditor.  In order to expedite the process, creditors may agree to a reduction in the amounts owed to them.

Any such agreement must be approved by the Court.  If the various parties are in agreement, they can submit, through counsel, a proposed Club to the Court, which will state how the funds are to be disbursed.  Once the Order has been signed, it can be sent to the appropriate entity property the funds, and the surplus funds can and so exist disbursed as per the terms of the signed Order.

Recovery of surplus funds tin can be a complicated and, at times, lengthy procedure.  Many lawyers, such as our house, will agree to represent parties and recover surplus funds on their behalf for a percentage of the amount of surplus funds actually paid, and then that simply filing costs are advanced and no legal fees are due unless the funds are actually recovered.    Enduring a foreclosure case tin can be difficult, simply potentially obtaining surplus funds may assist soften the blow.  If you believe you are entitled to such funds, we welcome your inquiry.

Source: https://www.newyorkrealestatelawyersblog.com/surplus-funds-in-foreclosure-cases-how-to-recover/

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