Surplus funds are a part of the foreclosure process that most people are not aware of. When a home goes through foreclosure, there can be money left over that comes from a variety of sources and can be taken as profit on the sale by the lender.
Most homeowners are not aware that these funds exist or they are not aware that they might be able to claim them after the foreclosure is completed. Surplus funds are not profits that should be taken by anyone else after the sale of a home that has been lost to foreclosure.
If you have recently gone through a foreclosure, you might not be aware that you actually claim the funds that remained as profits after your foreclosure. You might not be notified properly about these funds and this can lead to a need to go after the lender for not notifying you. If you have never heard of the presence of surplus funds after a foreclosure, you need to learn more before you lose money that is owed to you after your foreclosure.
An expert residential real estate lawyer at Lopez Law Group can help you recover your surplus funds in Florida.
If you are ready to learn more about surplus funds, read on!
What Are Surplus Funds?
Surplus funds are the monies that are left after you have closed on a foreclosure. This amount will be shown on the certificate of disbursements in most cases. These funds can come from taxes, insurance, operating expenses, and other fees. When surplus funds are present after a foreclosure, it means that the lender has actually made a profit on the sale of your home.
These funds can also be present if the person who owned the home and lost it to foreclosure had equity in the home before the lender sold it. You might receive a letter from the trustee that states that you have surplus funds. You can actually claim these funds after the foreclosure is complete, but most people who go through foreclosure are not aware of this fact and do not claim these funds.
What Happens After a Florida Foreclosure if I Have Surplus Funds to Claim?
Foreclosures are complex processes and they can be very upsetting to those who have lost a home. You might be feeling bewildered and worried about your future as well as uncertain about the steps that are correct for completing the process. You might not realize or remember that you actually have equity in your home and without the correct advisors working on your side you could be missing out on the collection of funds that are due to you.
The foreclosure process can take a long time to complete, but once your home is sold at auction, you should be notified by letter if there are surplus funds that you can claim. The surplus funds are basically the difference between the selling price and the outstanding balance of the loan. Foreclosure homes are sold at auction, so the price that they sell for can vary wildly, but the amount of equity that you have put into the home is static and is not impacted by the amount that the home sells for.
Each state has its own foreclosure laws and rules, but in most cases, the excess funds from the foreclosure are given to the most recent owner of the property. If someone else claims that they were the owner of the property, however, these funds might be claimed by this party. This is what is commonly done when there is a second mortgage on your property. The second mortgage holder will then claim the funds to help pay off the debt owed to them.
If there is anything left over after your second mortgage is satisfied, the remainder of the money will be given to you. If there is no second mortgage, you will receive the excess or surplus funds from the sale of your home directly.
How to Claim Surplus Funds From a Foreclosure in Florida
If you think that you will have excess funds that are due to you after your foreclosure, you will need to follow this process to claim them:
1. Provide Proof of Ownership
This step of the process is usually satisfied by providing a copy of the title that shows that you owned the property last. This can be handled by doing a title search as well if you do not have a copy of the title on hand.
2. Verification of Surplus Funds
This step of the process is handled by looking at the foreclosure records and then subtracting the loans or liens that were held against the property. The amount that is left over is the amount that should have been stated in the letter that told you about your surplus funds as well. Your attorney can help you to gather the evidence that is needed for this part of the claim but you should have gotten the information that you need from your Deposit of Surplus Funds letter.
3. Reach out to Trustee
You will need to reach out to the lienholder or bank that held your loan and inform them that there are excess funds that are due to you. This might require reaching out to more than one lender if you have a second or a third mortgage that is involved in the process.
4. Submit a Claim For the Surplus Funds
You will then submit a claim to the trustee and the court. This claim will be examined and the process of issuing you the funds will be undertaken if it is found that there are excess funds that you are due. If the funds are not claimed after two or three months, the court will receive the funds instead of you.
5. Hearings and Motions
There may need to be hearings and court proceedings to be completed before you can gain access to the funds that you are owed. When this process is completed, you will be able to claim your surplus funds.
Know Your Right to Surplus Funds in Florida
You need to be aware that you have a right to the surplus funds that resulted from your foreclosure. If you have a second mortgage, you might not receive any funds, but if there is no secondary party involved in the lienholder position, these excess funds should come to you. You should always be notified if there are surplus funds associated with the sale of your home and if you are not, this is a breach of law on the part of your lienholder.
You should make sure that you do not assume that the lienholder or lender will have your best interests at heart or that they will be sure to notify you of the excess funds that might be leftover after your home’s sale. Make sure that you do not leave yourself open to the loss of these funds.
You will be best served by having legal counsel who can help you to claim these funds that are rightfully yours. It is all too common for former homeowners to lose the funds that they are due because they did not take action in time to secure the funds after the foreclosure was completed.
Your surplus funds can be kept by other parties involved in the foreclosure if you do not correctly claim them. You will need to be sure that you are not left out of the loop about the money that you are due and that you do not miss the chance to properly claim your surplus funds because you were not aware that you could do so. This is a more common mistake than you might think because the process of being involved in a foreclosure is often very complicated.
Being sure that you are getting the funds that you are due often requires an expert’s help. This is why it is so important to work with an attorney who can help you to navigate the process of securing your excess or surplus funds. This is particularly true if you do not receive notice of the Deposit of Surplus Funds after the foreclosure is completed.
How Can an Attorney Help?
An attorney who is experienced in foreclosures can help you greatly with the entire foreclosure process. One of the most important ways that an attorney can assist you with this process, is by making sure that you have access to all of the documents that you need to have in order to claim the excess funds that you are due. Your attorney can also make sure that notice is served properly to the lienholder and that the claims process is done correctly.
Preventing delays and issues with paperwork can make it much more likely that you will get your surplus funds in a timely manner. The court might also end up being involved in the process of securing the excess funds that you are due, and you will need the help of an attorney with the process of working with the courts to secure your funds.
The order of priority related to recovering surplus funds can be confusing and an attorney can also help you to sort out who should be getting access to the surplus funds before they come to you. In most states, the order of priority is the first mortgage that is handling the foreclosure, then a second or third mortgage is given access to the funds. After this, if there was work done on the property or there were contractors involved in the sale, they will be paid from the surplus funds generated during the sale.
The homeowner is the last person on the list to recover surplus funds. But many homeowners incorrectly assume that there is not going to be any money left over from the sale of their home, especially if there are other parties that will gain access to the money first. Your attorney will be able to verify if there will be surplus funds and then they are able to check into the correct order of the parties that might be able to claim the funds.
Being sure that you are being protected from a loss of funds that should have come to you after the sale of your home is a big benefit of working with an attorney during your foreclosure. The court might also need to get involved in the process of determining what the correct order of payment is. Sometimes the documentation that another party offers is not correct and you will be spared giving away funds to this party if they are not actually owed them.
There is another situation that sometimes arises and this is the situation that takes place when a correctly—notified second or third party does not respond to the request to submit supporting documentation that shows their status in relation to the property. Your lawyer will help you to navigate the process by which this party can be excluded from the considerations related to your surplus funds if they do not reply in a timely manner to the inquiry.
Working With a Skilled Florida-Based Attorney Matters When Claiming Your Surplus Funds
If you believe that you will be entitled to surplus funds after your foreclosure, you should secure a lawyer. Working with an attorney who understands all of the steps of the process of securing the excess funds that can be left over after a foreclosure matters because they will help to be sure that you get the money that you are due.
It is all too common for homeowners to be left out of the loop by lienholders involved in the foreclosure of a home. While this is not legal, there is a timeframe that homeowners have to apply for these funds to be claimed and if this window is missed, they cannot seek to request the funds.
If you believe that you will be due surplus funds from the foreclosure process on your home, you will want to be sure that you initiate the claims process right away. A skilled lawyer can help you to submit the right documents and handle the inquiry with the court so that you get access to the surplus funds you are due. The Lopez Law Group is skilled in all areas of real estate law, including claiming surplus funds. We would be happy to provide you with the guidance and representation you need to navigate this process.