Probate Q&A Series

How Do I Recover Surplus Funds After a Foreclosure in North Carolina?

Detailed Answer

After a foreclosure sale in North Carolina, the clerk of superior court holds any amount left after the sale price covers the mortgage debt, interest and costs. A former owner, junior lienholder or other claimant can recover these surplus funds by following the procedures in Chapter 45 of the North Carolina General Statutes.

First, confirm the existence of surplus funds by contacting the clerk of superior court where the foreclosure occurred. Under G.S. 45-21.16, the foreclosure commissioner must deposit surplus proceeds with the clerk once the sale is confirmed. These funds remain available for distribution.

Next, file a petition for distribution of surplus funds under G.S. 45-21.20. This petition should be filed in the same foreclosure case file and include:

  • A description of the property and sale date
  • The amount of surplus funds you claim
  • Your name, address and contact information

Pay the required filing fee (typically around $66) when you submit the petition. After filing, serve a copy of the petition on the foreclosing lender, known junior lienholders and any other interested parties. The clerk will schedule a hearing to review competing claims.

At the hearing, the court examines the order of liens and claims to decide distribution priorities. The clerk distributes funds in this order:

  1. Costs of sale
  2. Senior and junior lienholders, in priority
  3. The former owner or other claimants

File your petition within one year of the foreclosure sale date. If no timely petition appears, G.S. 45-21.16 allows the court to release the surplus to the foreclosing lender.

Citing statutes:

If you believe you have a right to surplus funds after foreclosure, acting promptly makes recovery easier. At Pierce Law Group, our attorneys guide you through each step to secure your funds. Contact us today by emailing intake@piercelaw.com or calling (919) 341-7055.

Key Points to Remember

  • Confirm surplus funds with the clerk of superior court immediately after the sale.
  • File a petition within one year under G.S. 45-21.20 to avoid forfeiting your claim.
  • Include all required details in your petition: property description, sale date, claimed amount and contact information.
  • Serve all interested parties to ensure fair distribution.
  • Review lien priority rules to understand how funds will be allocated.