Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Detailed Answer
When a foreclosure sale in Idaho produces more funds than the debt owed, state law governs who may claim the surplus. Under Idaho Code § 45-1506, sale proceeds first cover costs and the foreclosing mortgage. Any remaining funds go to junior lienholders or creditors in order of recordation. If no valid claims exist, the former owner may recover the surplus.
To determine which creditors or lienholders could have valid claims to the surplus, follow these steps:
- Search the County Recorder’s Office: Review recorded instruments—mortgages, deeds of trust, judgments, and notices of lis pendens—in the county where the property is located. Documents appear in order of recording and determine priority.
- Review UCC Financing Statements: For liens on personal property, check UCC filings with the Idaho Secretary of State. Under Idaho Code Title 28, Chapter 9, financing statements establish priority among secured creditors.
- Check for Tax Liens: Contact the county treasurer or assessor to identify any unpaid property tax liens. Tax liens under Idaho Code § 63-1703 generally take priority over other liens.
- Understand Distribution Order: Idaho Code § 45-1506 mandates this order of distribution: sale costs, foreclosing lender, then junior lienholders in recording sequence. Surplus after these payments belongs to the former owner if unclaimed.
- File Claims Promptly: Potential claimants must submit a written claim to the clerk of the court that conducted the sale within one year after the sale date, per Idaho Code § 45-1514. Failing to claim within this window forfeits the right to those funds.
Helpful Hints
- Use the county recorder’s online search tools to view recorded documents quickly.
- Obtain certified copies of relevant recordings for your records.
- Consider hiring a title company for a comprehensive, prioritized lien search.
- Track deadlines for filing surplus-fund claims to avoid forfeiture.
- If multiple lienholders or complex claims arise, consider consulting an attorney for guidance.