Surplus Litigation

If your home was sold in a foreclosure auction for more money than you owed on the balance of the loan, you are entitled to the difference. At RA & Associates, we routinely handle surplus litigation cases for our clients, ensuring that they recover the money they deserve following a foreclosure.

Surplus funds after a foreclosure

After a foreclosure, most homeowners don’t anticipate having any money left over. In fact, many expect a deficiency, in which the house is sold for less than is owed on the loan, and the bank pursues them personally for the difference. However, for some individuals, the home ends up selling for more than they owe on their mortgage, resulting in a surplus. In these cases, the homeowner may be entitled to the surplus funds.

How equity affects the foreclosure process

If you have equity in your home, there is a strong chance that you could emerge from the foreclosure with some money. Even if you’ve failed to pay the mortgage, the lender is not entitled to all of the proceeds from the auction.

Equity is calculated by establishing the value of the property, minus any liens or amounts owed on the mortgage. When the balance of the loan is below the appraised value of the property, you have equity in your home. Conversely, if you owe more on your home than it’s worth, you have no equity. If you have no equity in your home, you can expect to lose money during the foreclosure process.

The distribution of surplus funds

At the auction, your property will be priced for the balance of the loan plus associated foreclosure fees. However, bids can (and often do) come in over this amount. When this occurs, the money is paid out in a very specific order.

First, the trustee’s fees and attorney’s fees will be paid from the surplus fund. Then, money will be distributed to pay the remaining balance on the loan. Once the lender is paid, funds will be dispersed to any lien holders. And finally, if there are any surplus funds left over after those initial payments, the homeowner may claim the remaining funds from the equity they have in the property. To place a claim on surplus funds, the homeowner must notify the trustee within 30 days of the foreclosure auction.

How to claim your surplus funds

Claiming surplus funds is an extremely technical process that can be fairly confusing for homeowners, especially after the stress of enduring a foreclosure. And, in many cases, other parties will also attempt to collect the funds that are due to the homeowner, which further complicates matters.

As such, if you are attempting to claim surplus funds following a foreclosure, it is imperative that you retain the services of an experienced real estate attorney who can help you recover the money you deserve. At RA & Associates, our Los Angeles lawyers will walk you through the entire process so you know what to expect every step of the way. In addition, we’ll make sure you meet all of the appropriate deadlines and file the proper paperwork, as failure to do so could permanently block you from receiving the money you’re entitled to.

Contact our office today

With over a decade of experience in real estate litigation, the attorneys at RA & Associates have successfully resolved countless cases for our clients. For help with your legal issue, contact our Los Angeles office today for a preliminary analysis of your case.