Claiming Surplus Funds After a North Carolina Foreclosure: Step-by-Step Guide

1. Detailed Answer

When a North Carolina foreclosure sale brings in more money than is needed to pay the remaining loan balance, expenses, taxes, and other liens, the extra money is called surplus funds. Under N.C. Gen. Stat. § 45-21.32, anyone entitled to those funds—usually the former owner, but sometimes junior lienholders—must petition the Clerk of Superior Court in the county where the foreclosure was filed.

Step 1 – Verify Surplus Funds Exist

• Review the Trustee’s Final Report and Account of Sale. It lists the sale price, expenses, and any surplus.
• Surplus is confirmed only after the 10-day upset-bid period (see § 45-21.27) expires and the sale is finalized.

Step 2 – Gather Supporting Documents

• Photo ID.
• Recorded deed showing former ownership.
• Foreclosure file number and copies of the Notice of Sale.
• Proof of junior lien or assignment (if you are not the former owner).
• Sworn statement of any assignments of rights to the surplus (if applicable).

Step 3 – Draft a Verified Petition

Your petition should:

• Cite § 45-21.32.
• State the foreclosure file number, sale date, and amount of surplus.
• Identify all other potential claimants and their last-known addresses.
• Include a Verification (your sworn signature before a notary).
• Request an order directing the clerk to disburse the surplus to you.

Step 4 – File With the Clerk of Superior Court

• File in the Special Proceedings division under the original foreclosure file.
• Pay the civil filing fee (currently $120) unless you qualify for a fee waiver using form AOC-G-106.
• The clerk will stamp the petition and assign a hearing date.

Step 5 – Serve All Interested Parties

• Use certified mail, sheriff service, or any method allowed under Rule 4 of the N.C. Rules of Civil Procedure.
• File a Certificate of Service showing the date and method of service.

Step 6 – Attend the Hearing

• Bring originals of your supporting documents.
• If no one disputes your claim, the clerk usually signs an order on the spot.
• When multiple claims exist, the clerk may require additional evidence or set the matter for trial.

Step 7 – Obtain the Disbursement Order

• The order directs the foreclosure trustee or clerk to issue a check for the surplus.
• Present photo ID when picking up the check.

Deadlines and Practical Tips

• No statutory deadline exists, but file quickly. The longer you wait, the more likely another claimant or judgment creditor will appear.
• Interest does not accrue on surplus funds while they sit in the court registry.
• If you live out of state, you may petition by mail and appear by video if the clerk allows.

2. Helpful Hints

• Check the court file weekly until the trustee’s final report shows the confirmed surplus.
• List all liens in your petition—even ones already satisfied—so the clerk knows who was served.
• Keep copies of every document you file or receive. Lost paperwork slows payment.
• Bring a stamped, self-addressed envelope in case the clerk mails the disbursement order.
• If the surplus exceeds $5,000 and heirs are involved, consider opening an estate so the personal representative can petition.
• Claims by judgment creditors are limited to judgments docketed before the foreclosure sale date (see § 1-234).
• If another claimant disputes your right, request mediation to avoid a full evidentiary hearing.

Surplus funds can disappear quickly. Our firm helps North Carolina property owners and lienholders recover the money they deserve. For focused guidance on your situation, call us today at (919) 341-7055. Let’s protect your rights and get your surplus back where it belongs.