Surplus funds cases are a relatively rare and niche area of North Carolina law. In a surplus funds case, the bank or local government has foreclosed on real property and sold the property to the highest bidder for more than the amount of their mortgage balance or tax debt. When this occurs, the extra monies are paid to the clerk to hold until a party entitled to the funds comes forward by filing a Petition for Surplus Funds.
Property owners who have endured the foreclosure process often encounter obstacles when they ask their local Clerk of Court for surplus funds. This money belongs to them and the clerk should just hand it over, right? Unfortunately, it’s not that easy. There is not a simple form to fill out to claim these surplus funds. Instead, the clerks of court in North Carolina require the filing of a petition, which is usually done by a licensed attorney.
The clerks have good reason to want an attorney’s involvement. The participation of an attorney gives the clerks some assurance that the individual claiming the funds is, in fact, entitled to them. Many clerks even require an attorney to provide a title opinion or sworn statement detailing the liens on the property foreclosed and the priority of those liens. A thorough title search revealing that all prior deeds of trust, tax liens, mechanics liens, POA liens, and possible judgments against the petitioner have been satisfied or expired reassures the clerk that the petitioner should receive the surplus funds requested.
In addition to the title search, hiring an attorney ensures that the Petition for Surplus Funds, summonses, and notice of hearing are properly served on anyone who might have a claim to the funds. In many cases, the property owner is the only individual entitled to the surplus monies, which simplifies the service requirements. However, if the petitioner fails to notify a necessary party that the surplus funds have been requested, the clerk can delay making a decision until all of the parties have an opportunity to answer.
After your property has been foreclosed for not paying your mortgage or taxes, the last thing most people want to do is see the inside of a courtroom. However, going to court may result in your recovering surplus funds that to which you are lawfully entitled. Hiring an attorney to help you through this process can help you recoup what’s yours.
Contact Matt Rupp at (828) 265-0016 or matt@robanglelaw.com, and I’ll be happy to help you claim your surplus funds.