Recovering Surplus Funds After a Mortgage Foreclosure Sale in North Carolina
Detailed Answer
When a lender forecloses on real property and sells it at auction, sale proceeds may exceed the amount owed. North Carolina law requires that any surplus go to the former owner of the property. To recover these funds, you must act within a strict time frame and follow the court process under Chapter 45 of the North Carolina General Statutes.
First, determine if a surplus exists. Review the foreclosure sale record and compare the final bid to your outstanding debt plus costs. Any excess forms the surplus. Under N.C. Gen. Stat. § 45-21.34, the clerk holds surplus funds for six months after the sale. If no one claims the money, the clerk pays it to you upon proper application. You must file a written petition in the clerk’s office where the foreclosure occurred.
Your petition should include:
- A copy of the trustee or substitute trustee’s deed.
- The foreclosure sale order.
- An affidavit stating you are the former owner and entitled to the surplus.
- Proof of identity and property interest, such as a recorded deed.
After you file, you must serve notice on all parties in interest. Those parties include the foreclosing creditor and any junior lienholders. The court schedules a hearing. If no one objects, the clerk enters an order directing payment of the surplus to you.
If someone contests your claim, the judge holds a hearing on the merits. You and the objecting party present evidence, such as loan payoff statements and lien searches. The court then decides who holds the rightful claim. If the court rules in your favor, the clerk issues the funds.
Act quickly. You only have six months from the date of foreclosure sale to file your petition under N.C. Gen. Stat. § 45-21.34. After six months, the funds become property of the county and you lose your right to recover them.
Key Steps to Recover Surplus Funds
- Gather sale documents: deed, sale order and foreclosure notice.
- Calculate surplus: sale price minus debt and sale costs.
- Prepare and file a petition for surplus funds in the clerk’s office.
- Serve notice on the foreclosing creditor and any junior lienholders.
- Attend the hearing or respond to any objections.
- Obtain the clerk’s order and receive payment of your surplus.
- Act within six months of the sale under N.C. Gen. Stat. § 45-21.34 (ncleg.gov/GS_45-21.34).
Recovering surplus funds can restore money rightfully yours. If you need guidance, Pierce Law Group has experienced attorneys ready to help you navigate this process. Contact us today to discuss your situation. Email us at intake@piercelaw.com or call (919) 341-7055.
