Disclaimer: This is educational information only and not legal advice. If you need help recovering funds after a foreclosure sale in Arkansas, consult a licensed Arkansas attorney about your specific situation.
Detailed answer: How to file a special proceeding to recover foreclosure surplus funds in Arkansas
After a foreclosure sale, the sale may produce more money than was necessary to pay the foreclosing creditor’s debt, costs, and junior liens. That excess is typically called the surplus. In Arkansas, a person who claims entitlement to surplus funds must bring a court action (often called a special proceeding or a petition in the circuit court where the property is located) to obtain a court order directing the clerk to release those funds.
- Confirm a surplus exists and who holds it.
Start by obtaining the foreclosure-sale paperwork from the sheriff or trustee and the county circuit clerk. The sheriff’s sale report, certificate of sale, or deed and the clerk’s register will show the sale price, payoff amounts, costs, and whether any funds were deposited with the clerk after the sale.
- Check public records and contact the county clerk or circuit clerk.
Call or visit the circuit clerk’s office in the county where the foreclosed property is located. Ask whether surplus proceeds were deposited and what the local procedure is for claiming those funds. The clerk can often tell you whether the funds are being held and how they are labeled (e.g., “sale overplus” or “excess proceeds”).
- Identify all potential claimants and interested parties.
Common interested parties include: the former owner/borrower, any junior lienholders, the foreclosing creditor, anyone who purchased the property at the sale, and the county sheriff or trustee. You must name and serve these parties when you file your petition.
- Gather required evidence and documents.
Typical exhibits you will attach to the petition include: the sheriff’s certificate of sale or deed, the foreclosure judgment or power-of-sale documents, payoff statements showing the amounts paid from the sale, recorded deed or mortgage records, proof of identity and ownership (deed, title, or affidavit), and any documents showing priority of claims (recorded liens). If the claimant is an heir or personal representative, include probate letters or other authority.
- Prepare and file a verified petition or complaint (special proceeding).
File a petition in the circuit court of the county where the property is located. The petition should: (a) identify the court and case caption; (b) describe the foreclosure sale and where records show the surplus; (c) state your legal basis for claiming the surplus (e.g., you were the debtor and entitled to excess proceeds after lien satisfaction); (d) list all known interested parties; (e) attach supporting exhibits; and (f) request a hearing and an order directing the clerk to disburse funds. Sign the petition under oath, if required by local rules.
- Pay filing fees and docket the case.
Pay the required circuit-court filing fee and any administrative costs. If cost is a barrier, ask the clerk about fee-waiver procedures.
- Serve the petition on all interested parties.
Serve the foreclosing creditor, sheriff or trustee, any purchaser at the sale (if applicable), and all junior lienholders or anyone else with a recorded interest. Use the method required by Arkansas law and local court rules (usually personal service or certified mail). Obtain proof of service (return receipts or sheriff’s returns).
- Attend the hearing and present evidence.
The court will set a hearing. At the hearing, present your documentary evidence and be prepared to explain why you are entitled to the surplus (priority of claims, amounts owed, identity/relationship to the party of record). The court will resolve competing claims and issue an order directing distribution of the funds according to priority and judgments.
- Follow the court’s distribution order.
Once the court issues an order directing the clerk to pay a claimant, the clerk will disburse the funds as ordered. If multiple claimants remain, the clerk will pay according to the court’s priority determination.
- If you lose or there are competing claims, consider appeal or settlement.
If the court denies your claim or determines another party has priority, you may have options such as a motion for reconsideration or an appeal. Consult an attorney about deadlines and next steps.
Practical documents and details you will likely need
- Copy of mortgage note and recorded mortgage/deed of trust
- Sheriff’s sale certificate, sheriff’s return, or trustee’s deed
- Foreclosure judgment or default judgment and order of sale
- Payoff statements, itemized sale accounting, and receipts showing how sale proceeds were applied
- Proof of identity (government ID) and proof of ownership or authority to claim (deed, probate documents, assignment, etc.)
- Copies of recorded liens or judgments that might affect priority
Where to look for Arkansas statutory or court-rule guidance
Procedural rules and statutes that may affect a surplus-claim action are found in Arkansas statutes and local circuit-court rules. For official statutes and to search by topic, use the Arkansas General Assembly website: https://www.arkleg.state.ar.us. For court forms, local circuits, and administrative information, see the Arkansas Judiciary at https://arcourts.gov.
Helpful hints
- Act quickly. Time limits and statutes of limitation can bar claims after a period. Even when the exact deadline is unclear, prompt action preserves options.
- Start with the county circuit clerk. Clerks often have practical procedures and can confirm whether funds are being held and under what label.
- Bring all original documents to the clerk and to the hearing. Originals and certified copies make proof easier.
- If the property owner is deceased or incapacitated, obtain probate or letters testamentary early. Courts often require proof of authority to claim money on behalf of an estate.
- Expect competing claims. Junior lienholders and purchasers sometimes file competing petitions. The court decides priority based on recorded documents and the foreclosure court order.
- Document all communications with the clerk, sheriff, and other parties. Save receipts, certified-mail tracking, and proofs of service.
- For small amounts, weigh cost vs. benefit. Filing fees, attorney costs, and time can exceed the surplus amount; in those cases, talk with the clerk about small-claims or administrative routes or consider limited-scope legal help.
- Consider hiring an Arkansas-licensed attorney. An attorney familiar with foreclosure and surplus proceedings in your county can prepare pleadings, handle service, and represent you at the hearing.
If you want, I can prepare a checklist of documents tailored to your situation or a sample petition outline that reflects typical pleadings used in Arkansas circuit court (you would still need a local attorney to review it before filing).