In a regular real property sale, you make a profit if the selling price is higher than the debt you owe and this difference between debt and value is referred to as equity. In a foreclosure sale, you also receive a benefit if the selling price is higher than the amount you owe on the mortgage, and any other liens, but in foreclosure this is called a surplus. Once the debts are paid, the borrower is entitled to recover this surplus.
Foreclosure Sales in California are conducted by a trustee and it is the trustee that also distributes the surplus. The Trustee’s Deed Upon Sale, which is recorded with the County Recorder, documents the date of the sale, the identity of the purchaser and the amount they paid as well as all the outstanding liens that were satisfied by the purchase price and if there is a surplus due to the borrower. After the Trustee’s Deed Upon Sale is recorded, the trustee is required by statute to notify the borrower that they have a right to claim these funds and if the borrower complies with the trustee’s requirements they disburse the surplus funds.
Problems can arise with the disbursement of surplus funds beginning with the fact that many borrowers, or their heirs, don’t realize they are entitled to them. Trustees may also be unscrupulous and claim that they have to hold onto the funds to pay off non-existent liens, thereby delaying you from receiving money you are entitled to and keeping the funds for their own purposes, whatever those might be. To effectuate a delay, the trustee may communicate with the borrower at a location where they no longer live, or they may neglect to send a notice knowing that the borrower has moved. Every month that a trustee delays in disbursing hundreds of thousands of dollars in surplus funds is an opportunity for the trustee to profit from those funds through interest or other investments which may result in the trustee being caught up short and a surplus check to be returned for insufficient funds. Through all this the trustee acts with impunity since the borrower, or their heirs, probably won’t know the law and might be too cash-strapped to afford to hire an attorney.
Other problems may arise when marketers send out letters claiming that borrowers or heirs must contact them to receive these surplus funds even though they don’t hold these funds. These advertisements confuse the borrower into thinking that it is another firm and not the trustee that is holding these surplus funds. Some of these firms will have an insider relationship with the trustee and will be receiving information from them to help them locate borrowers and market to them.
The attorneys at Advocate Legal are experts at retrieving surplus funds from a trustee. If the funds are going to a homeowner who simply lost a house with a lot of equity to foreclosure, the process may be simple. If the foreclosure came as a result of a death, the process may be more complicated. If the foreclosure occurred more than a year ago and the funds have gone to the Unclaimed Funds Department of the California State Controller’s Office, the process may be even more complicated.
Advocate Legal will retrieve these surplus funds for our clients on a contingency basis, meaning the firm gets paid when the borrower gets paid. The way this works is that the client authorizes Advocate Legal to receive the funds directly from the trustee and disburse them after taking a fee. This process can take anywhere from one to six months.
Contact Lawyers with the Knowledge and Skills to Retrieve your Surplus Funds
With over a decade of experience and a commitment to serving homeowners and borrowers, our lawyers at Advocate Legal including attorney Susan Murphy can help you get the surplus funds you are entitled to after a foreclosure sale.