Detailed Answer
After a Michigan foreclosure or tax sale, the sheriff may hold surplus funds when sale proceeds exceed outstanding debts. Under Michigan law, these funds must satisfy all valid lienholders and creditors before the former homeowner can claim any remainder. Key statutes govern this process:
- MCL 600.3280 (Sheriff’s sale surplus fund procedures)
- MCL 600.3240–600.3245 (Claims against surplus funds)
To determine if other creditors or lienholders could claim surplus funds, follow these steps:
- Search County Land Records. Visit the county register of deeds where the property sits. Review recorded mortgages, deeds of trust, judgment liens and mechanic’s liens. Note recording dates and amounts.
- Review UCC Financing Statements. Access Michigan’s Department of Licensing and Regulatory Affairs (LARA) online database to find Uniform Commercial Code (UCC) filings. Secured creditors often perfect interests here.
- Check Judgment Docket. The county clerk’s office maintains a docket of civil judgments. Any judgment entered before the foreclosure sale may attach to surplus funds.
- Investigate Tax Liens. Federal tax liens record with the county register of deeds. State and local tax liens typically appear in county treasurer records. Under MCL 211.78, unpaid property taxes take priority.
- Search for HOA or Condo Association Liens. Homeowners associations may record liens for unpaid dues. Check association records or county filings.
- Confirm Claim Deadlines. Under MCL 600.3242, claimants must file within six months after the sale. Late claims generally fail.
Once you identify potential claimants, advise them to file a verified petition with the circuit court. The court will schedule a hearing, notify all claimants and distribute funds by priority: costs of sale, senior liens, junior liens, then judgments and other encumbrances. Any undistributed surplus returns to the former owner.
Helpful Hints
- Compare lien recording dates to the foreclosure sale date to confirm priority.
- Use a title company for a comprehensive title search when large sums are at stake.
- Keep copies of all lien documents, including recording numbers and dates.
- Monitor the court docket for claim deadlines and hearing dates.
- Consult a real estate attorney if competing claims arise or amounts exceed $5,000.
Disclaimer: This article is for educational purposes and does not constitute legal advice. Consult a licensed Michigan attorney for guidance on your specific situation.