Detailed Answer
When a property sells at a foreclosure auction in Kentucky, the sale price may exceed the total debt, interest and court costs. Any excess proceeds are called “surplus funds.” An interested party—such as the former owner or a junior lienholder—can follow these steps to find out if surplus funds remain after a foreclosure sale:
1. Obtain the Report of Sale
Within days of the auction, the circuit court clerk files a Report of Sale in the foreclosure case docket. This record shows the highest bid, the amount credited to the foreclosing creditor’s judgment and the net proceeds. You can access the report in person at the county clerk’s office or, if available, through the court’s online records portal.
2. Compare Sale Proceeds to Debt and Costs
Review the Report of Sale to see:
- Total sale price
- Amount applied to the judgment (principal, interest and fees)
- Clerk’s fees and advertising costs
If the sale price exceeds the combined judgment and costs, the excess is surplus. For an overview of the distribution process, see KRS Chapter 426 (Sale Under Power of Sale).
3. Watch for the Clerk’s Notice of Surplus Funds
Under KRS 426.615, the clerk must notify by mail any parties who recorded liens before the sale and must publish notice in a local newspaper. That notice will state how much surplus remains and outline the deadline to file a claim. You can also inquire directly at the clerk’s office for a status update.
4. File a Verified Claim
To recover surplus funds, you must file a verified petition in the foreclosure case within six months of the sale date. In your petition, explain your interest (former owner, junior lienholder, etc.) and attach documentation (e.g., lien recordings). The court will review your claim and, if valid, enter an order directing the clerk to pay you the surplus. See KRS 426.615.
Helpful Hints
- Check deadlines carefully: Kentucky law gives you only six months from the sale date to file a verified claim.
- Use the case number: When contacting the clerk’s office, reference the foreclosure case number for faster assistance.
- Keep records: Retain copies of your lien recording, the petition, and any correspondence with the court.
- Monitor local newspapers: Surplus notices are typically published in the same paper used for sale advertisements.
- Consider professional help: If multiple lienholders claim surplus, a real estate attorney or title professional can help navigate priorities and documentation.