What steps must I take to recover surplus funds after a foreclosure in North Carolina?
Detailed Answer
When a lender forecloses on real property in North Carolina under the power of sale, any amount paid at the foreclosure sale that exceeds the outstanding debt, interest, costs and fees becomes surplus funds. North Carolina law requires the clerk of court to hold those surplus funds and distribute them to the rightful owner. To recover those funds, you must follow a specific court process in the county where the foreclosure occurred.
1. Confirm that surplus funds exist. After the sale, review the foreclosure docket entry or the sale report filed by the clerk. It will show the sale price, the amount applied to the debt and costs, and any remaining balance. If the sale price exceeds all amounts due, the clerk will record a deposit of surplus funds.
2. Monitor the clerk’s notice. North Carolina General Statute §45-21.38(G.S. 45-21.38) requires the clerk to advertise the deposit of surplus funds in a newspaper of general circulation in the foreclosure county once a week for two successive weeks. The notice will include the case number, the amount on deposit and the deadline for filing a claim.
3. File a petition for disbursement of surplus funds. Under G.S. 45-21.37(G.S. 45-21.37), any person claiming entitlement to surplus funds must file a written petition in the clerk’s office. Your petition should include:
- The foreclosure case name and number.
- Your name and contact information.
- The amount of surplus you claim.
- A statement of your interest in the property (for example, former owner or lienholder).
- Any supporting documentation, such as the foreclosure sale report or proof of prior ownership.
File your petition before the deadline stated in the clerk’s notice. If you miss that deadline, you risk forfeiting your right to the funds.
4. Serve required parties. After you file, the clerk will set a hearing date. You must serve the petitioner, the foreclosing lender (or its counsel) and any other interested parties with notice of your petition and the hearing. The clerk’s office will provide instructions on whom to serve and the acceptable methods of service.
5. Attend the hearing and obtain the order. At the hearing, you present evidence supporting your claim to the funds. The lender or other claimants may object. If the clerk finds in your favor, the clerk will enter an order directing payment of the surplus to you.
6. Receive your funds. Once the clerk signs the disbursement order, the clerk will prepare a check for the awarded amount. You or your authorized representative can pick up the check at the clerk’s office or request that it be mailed to you.
Key Steps to Recover Surplus Funds After Foreclosure
- Review the foreclosure sale report to confirm a surplus.
- Watch for the clerk’s public notice under G.S. 45-21.38.
- File your written petition before the statutory deadline per G.S. 45-21.37.
- Serve all required parties with notice of your petition and hearing.
- Attend the clerk’s hearing and obtain an order directing disbursement.
- Collect your surplus funds from the clerk’s office.
Get Help Recovering Surplus Funds
Recovering surplus funds after a foreclosure involves strict deadlines and procedural requirements under North Carolina law. Pierce Law Group has significant experience guiding clients through every step of this process. To discuss your situation and begin your claim, please email us at intake@piercelaw.com or call us at (919) 341-7055. Our team will review your case promptly and help you secure the funds rightfully yours.
