Losing a home to the liquidation process can feel daunting, but there might be a positive outcome: surplus funds. These are the additional proceeds from a property sale, and many former homeowners are unaware they could be eligible to recover this money. The procedure for how to claim surplus funds from foreclosure may be challenging, but knowing the steps involved can assist you in recovering what is rightfully yours.
At Shapero Law Firm, we focus on assisting homeowners through this journey and verifying that they secure their extra revenue with ease and confidence.
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It refers to the extra money left after a property repossession sale once all debts, like the mortgage, are paid off. If a property sells for more than what’s owed, the remaining balance may belong to the previous homeowner.
In many cases, this extra money arises because properties are sold at auction for more than the outstanding debt. When the market is competitive—especially in cities like Los Angeles—investors often bid high to secure properties. This can lead to a sale price exceeding the amount owed by the previous homeowner, generating these funds.
For example, California uses a nonjudicial foreclosure process, where properties are sold via public auction. In this scenario, any proceeds remaining after satisfying the mortgage and associated costs are considered additional capital.
Typically, the original homeowner is entitled to demand any surplus funds. However, other parties may also have a request, including secondary lenders or creditors, with liens on the property. It’s essential to check the records and guarantee no other petitions exist that could affect your entitlement.
If there are no other declarations, the capital might belong to you as the previous owner. In California, creditors can have up to a year to make a claim before the funds are turned over to the state, so acting quickly is key.
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If your property in Los Angeles is foreclosed, you might be entitled to the extra money. But how can you obtain surplus funds from a liquidation? The process can be intricate and may involve legal hurdles, so understanding the steps is crucial.
If you want to know how to request these assets, here’s a general outline of the steps you can take:
1. Verify the Existence of Surplus Funds
Contact the representative or the attorney managing the forfeiture. They can confirm if the capital was generated from the sale of your property.
2. Submit Your Claim
Once verified, you may need to file a request with the trustee. This involves submitting documentation proving your identity and ownership of the property.
3. Wait for Review
After submitting the petition, the fiduciary may review your documents. They may also notify any other creditors or interested parties to see if they wish to dispute your claim.
4. Receive Your Funds
If there are no disputes, you should receive the money within a few weeks. But, if multiple parties demand them, the process may be delayed, requiring additional legal steps.
They can be used for a variety of financial needs. Many people choose to:
There are no legal restrictions on how you can use them, but it’s wise to consult a financial advisor to make the most of this windfall.
Unfortunately, scams targeting surplus funds are increasingly common. Fraudsters may present themselves as recovery agents, promising to help homeowners reclaim their money for a hefty fee. These scams often target vulnerable individuals who are unfamiliar with the legal process. Here are some strategic points to protect yourself from these schemes:
Recovering surplus funds after a foreclosure can be complex. As a leading foreclosure lawyer in Los Angeles, Shapero Law Firm assists residents in efficiently claiming these assets and protecting their rights. Contact us today for a free consultation and let us help you recover what’s rightfully yours.
With over a decade of litigation experience, Attorney Sarah Shapero, founder of Shapero Law Firm, has secured seven-figure jury trial wins and saved countless homes from foreclosure. A Super Lawyer and Lawyer of Distinction, she brings expertise in foreclosure, employment, and bankruptcy law, practicing in California and federal courts.
Trust her proven track record and commitment to delivering powerful legal results.
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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by Founding Partner, Sarah Shapero who has more than 10 years of legal experience as a real estate attorney.
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