Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Detailed Answer
When a property sells at a nonjudicial foreclosure sale for more than the total debt and costs, the excess proceeds—called surplus funds—remain with the foreclosure trustee. Under California law, any person with a legal interest in those funds may petition the superior court to obtain them. The key statutes are California Code of Civil Procedure §726 and §729.060.
- Determine your eligibility. You must have a recorded interest in the property at the time of the sale—such as a prior owner, junior lienholder or judgment creditor. See CCP §726.
- Obtain the surplus amount. Within 30 days after the sale, the trustee must deposit any surplus with the court clerk. If you don’t see the funds deposited, contact the trustee for proof of deposit.
- Prepare a verified petition. Under CCP §729.060, your petition must:
- Identify the foreclosure sale (date, trustee, property address).
- State your legal interest and the amount claimed.
- Be signed under penalty of perjury.
- File and serve the petition. File your petition in the superior court clerk’s office where the foreclosure was recorded. Serve a copy on the foreclosure trustee and all known interested parties (senior lienholders, purchaser, property owner) at least 30 days before the hearing. Proof of service is required.
- Request a hearing. After service, set a hearing date with the court. The court will issue a notice of hearing. Some counties require a filing fee and judge’s availability—check local rules.
- Attend the hearing. Present evidence of your interest (recorded documents, receipts, correspondence). Opposing parties may contest your claim. The court will rule on entitlement and distribution amount.
- Obtain and record the court order. If the court awards you the funds, it will issue an order directing the clerk to disburse the surplus. File a certified copy of that order with the clerk and then collect your payment.
Helpful Hints
- Start early: Surplus petitions have strict timing—missing deadlines can forfeit your claim.
- Use certified copies: Provide clear evidence of liens or ownership to strengthen your petition.
- Check local forms: Many counties publish surplus petition templates on their superior court websites.
- Track all service: Keep proof of delivery and service to avoid delays at hearing.
- Consider professional help: While not required, a paralegal or filing service can assist with court procedures.