Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney to discuss your specific situation.
Detailed Answer
When a property sells at a sheriff’s sale for more than the amount owed, the surplus funds remain in the court registry awaiting distribution. In Kansas, distribution follows the priority of liens and judgments under K.S.A. 60-2410. To determine whether other creditors or lienholders have valid claims to the surplus, follow these steps:
- Review the Foreclosure File. Obtain the court’s foreclosure packet, including the referee’s report or sheriff’s return. It may list lienholders who appeared in the action.
- Conduct a Title Search. Search county real estate records for recorded mortgages, deeds of trust, and other liens as of the sale date. This reveals junior mortgagees, judgment liens, and tax liens.
- Examine Judgment Docket. Visit the county clerk’s office or online docket to identify recorded judgment liens against the former property owner. Judgment liens attach to real estate in Kansas once docketed under K.S.A. 60-2201.
- Check UCC Filings. Search the Kansas Secured Transaction Registration System for Uniform Commercial Code (UCC) financing statements. Secured creditors who filed UCC-1 forms may have priority over certain surplus funds.
- Identify Priority under K.S.A. 60-2410. Under K.S.A. 60-2410, the court distributes surplus funds in this order: first, foreclosure sale costs; next, the foreclosing creditor’s judgment; then, other judgment and tax liens in the order they were docketed or recorded; and finally any remaining junior secured creditors.
- File a Claim for Surplus Funds. Interested lienholders must file a written claim or motion with the court before the surplus is disbursed. Kansas law generally requires a claim no later than 30 days after notice of surplus or as the court’s local rules prescribe.
- Attend the Distribution Hearing. The court typically sets a hearing to approve distributions. Creditors who timely file claims receive notice and an opportunity to be heard.
Helpful Hints
- Request a certified copy of the foreclosure sale report from the clerk of district court.
- Use an online title service or hire a title examiner for a comprehensive lien search.
- Verify docket dates to confirm lien priority.
- Consult the county treasurer’s office for unpaid property tax lien information.
- File your claim early and include proof of your lien or judgment.
- Keep track of statutory deadlines under K.S.A. 60-2410 to avoid forfeiture of claim rights.