Probate Q&A Series

How do I petition for surplus funds after a foreclosure sale of a deceased relative’s property in North Carolina?

Detailed Answer

When a lender forecloses on real estate, the sheriff sells the property at a public auction. If the sale price exceeds the total debts and costs secured by the property, state law requires the sheriff to hold the extra money as surplus funds. Under North Carolina law, a person with a valid claim—such as the estate of the deceased owner—can petition the court to recover these funds.

Step 1: Verify Available Surplus Funds

Go to the clerk of superior court in the county where the foreclosure occurred. Ask to review the foreclosure file. Confirm the sale produced surplus funds and note the exact amount the sheriff still holds.

Step 2: Establish Your Right to the Funds

Only the decedent’s estate or someone authorized by that estate may claim the surplus. To gain authority:

  • File for probate administration under Chapter 28A of the North Carolina General Statutes if no estate exists.
  • Obtain letters testamentary (if there’s a will) or letters of administration (if no will).
  • Collect a certified copy of the decedent’s death certificate.

Step 3: Prepare and File the Surplus Funds Petition

Under N.C. Gen. Stat. § 45-21.36, file a petition in the same county where the sheriff’s sale took place. Your petition must include:

  • Copy of the foreclosure judgment or order confirming sale.
  • Certified copy of the sheriff’s deed.
  • Letters testamentary or letters of administration.
  • Certified death certificate of the decedent.
  • Legal description of the foreclosed property.
  • Affidavit of heirship, if multiple heirs exist.
  • Proof of payment of any court filing fees.

Step 4: Serve Notice and Attend the Hearing

North Carolina law requires serving notice on all parties with an interest, including the foreclosing lender, any subordinate lienholders and the sheriff’s sale purchaser. After notice, the court schedules a hearing. Present your documents and explain your right to the funds. If the court approves your petition, it issues an order directing the sheriff to release the surplus to you.

Step 5: Collect the Surplus Funds

Take the court’s order to the sheriff’s office. Provide identification and any bond the court may require. The sheriff must then pay out the surplus funds as directed by the court’s order.

Checklist for Petitioning Surplus Funds

  • Confirm the sale date and surplus amount with the clerk of court.
  • Open a probate estate and secure letters of administration or testamentary.
  • Gather all required documents: judgment, deed, death certificate, letters, and affidavits.
  • Prepare and file the petition under N.C. Gen. Stat. § 45-21.36.
  • Serve notice to all interested parties per court rules.
  • Attend the hearing and present proof of your claim.
  • Obtain the clerk’s order and collect funds from the sheriff.
  • File proof of distribution with the clerk if required.

Call to Action

Recovering surplus funds after a loved one’s property foreclosure involves strict deadlines and complex requirements. The attorneys at Pierce Law Group guide you through each step to protect your claim. Contact us today via email at intake@piercelaw.com or call (919) 341-7055 to discuss your situation and secure the funds you deserve.