Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Detailed Answer
Understanding Surplus Funds
When a property sells for more than the total owed on a mortgage or judgment, the extra amount is called “surplus funds.” Iowa law treats these funds as the rights of the former owner and any junior lienholders.
Foreclosure by Advertisement (Trustee’s Sale)
Most non-judicial foreclosures in Iowa proceed by advertisement under Iowa Code 726.43. After a trustee’s sale, the trustee must remit any surplus funds to the county clerk within 30 days of sale. The clerk then publishes a notice and holds the funds for claimants.
For full text, see Iowa Code 726.43: https://www.legis.iowa.gov/docs/code/626.43.pdf.
Judicial Foreclosure
In a judicial foreclosure under Iowa Code 755.10, the court clerk distributes sale proceeds. If a surplus remains, the clerk notifies interested parties. For details, review Iowa Code 755.10: https://www.legis.iowa.gov/docs/code/655.10.pdf.
How to Determine if Surplus Funds Remain
- Obtain Sale Information: Locate the date of sale, property address, and sale price in the notice of trustee’s sale or court order.
- Contact the Trustee or Sheriff: Request a copy of the distribution statement showing total bid, liens paid, costs, and any surplus.
- Check with the County Clerk of Court: The clerk’s office maintains a list of unclaimed surplus funds. Many Iowa counties post lists online or at the courthouse.
- Search Public Records: Visit the county recorder’s office or online docket for the foreclosure file to review payoff statements and disbursement records.
- Review Published Notices: Under Iowa Code 726.43, the county clerk must publish notice of surplus funds. Check local newspapers or the clerk’s website.
Filing a Claim
To claim surplus funds, file a verified petition with the county clerk. Provide proof of your interest, such as a recorded lien or deed. In a trustee’s sale, claimants must apply within one year of the sale or the funds escheat to the state.
If multiple parties file claims, the clerk prioritizes according to lien chronology. If in doubt, consult with an attorney promptly to protect your rights.
Helpful Hints
- Gather all foreclosure sale documents before contacting county offices.
- Ask the county clerk if they maintain an online surplus-funds register.
- Note deadlines: most claims in non-judicial sales expire one year after the sale date.
- Keep copies of petitions and proof of service when you file a claim.
- Verify your lien position to determine priority for surplus distribution.