1. What Are Surplus Funds?
When a foreclosed property sells at auction for more than the total debt owed, the extra money—called surplus funds or excess proceeds—belongs to the former homeowner. Under Cal. Civ. Code § 2924k, sale proceeds are distributed in this order:
- Foreclosure expenses (trustee fees, advertising, etc.)
- The foreclosing lender
- Junior lienholders (like HELOCs or second mortgages)
- The former homeowner (you)
If funds remain after all debts are paid, the trustee must hold them in trust for the rightful claimant.
2. How to Find Out If You’re Owed Money
After the sale:
- Contact the foreclosure trustee listed on your Notice of Trustee’s Sale.
- Check the county recorder’s office or public trustee sale reports for the sale amount.
- Compare the sale price to your loan payoff—if it sold higher, there may be surplus funds.
3. How to Claim Your Surplus Funds
To claim the money:
- File a written claim with the trustee within the timeframe stated in their notice (typically 30–60 days).
- Include:
- Proof of identity
- Property address and sale date
- Documentation of ownership (e.g., deed or property tax bill)
- Await written confirmation and payment once the claim is approved.
4. Beware of “Recovery” Scams
Fraudsters often contact former homeowners claiming they can “retrieve your money” for a fee. California law (Cal. Civ. Code § 2945.75) prohibits foreclosure consultants from collecting more than 10% of recovered funds and requires a written contract. Never pay upfront or provide personal info unless you’ve verified the trustee or attorney.
5. Keep Records Organized
Hold onto all foreclosure and trustee correspondence—it’s your proof of entitlement. If the trustee has gone out of business, contact the Department of Real Estate (DRE) for next steps. Even after foreclosure, equity may still be yours. With the right paperwork and persistence, you can reclaim what’s left—and protect yourself from those who prey on homeowners after the sale.
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