Determining Creditor and Lienholder Claims on Surplus Funds in Mississippi
Disclaimer: This article is for educational purposes and does not constitute legal advice.
Detailed Answer
When a foreclosed property sells for more than the amount owed, the lender or court must distribute the surplus. You need to identify potential claims from other creditors or lienholders before the debtor collects any remaining funds. Mississippi law outlines procedures for surplus distribution under both power-of-sale and judicial foreclosure methods.
1. Understand the Foreclosure Type
- Power-of-Sale Foreclosure: A non-judicial process governed by Mississippi Code § 89-1-55 (Miss. Code Ann. § 89-1-55). After costs and senior liens, the trustee applies sale proceeds to junior lienholders in order of recordation. Any remaining balance goes to the mortgagor.
- Judicial Foreclosure or Execution Sale: Conducted by court order under Mississippi Code § 11-5-37 (Miss. Code Ann. § 11-5-37). The sheriff or clerk distributes proceeds to lienholders and creditors by priority and then returns surplus to the judgment debtor.
2. Review Title and Recorded Liens
Obtain a certified title search through the county land records. Identify all recorded deeds of trust, mortgages, judgments, tax liens, and mechanic’s liens. Key points:
- Priority follows the recording date. Earlier liens have first claim to proceeds.
- Subordinate lienholders must file a claim within statutory deadlines. Missing deadlines may forfeit their rights.
3. Contact the Clerk or Trustee
Request a surplus fund disbursement form from the county chancery clerk (judicial sale) or trustee (power-of-sale sale). The form outlines instructions and deadlines for filing claims. Follow all procedural requirements, such as providing a sworn statement or bond if needed.
4. File a Claim for Surplus Funds
Complete and file the claim form before the deadline. Submit certified documentation proving your lien or judgment. The clerk or trustee will verify your claim, resolve competing claims by priority, and issue payment if approved.
Helpful Hints
- Obtain an updated title report to catch any recent liens.
- Verify claim deadlines in § 89-1-55 and § 11-5-37 before filing.
- Keep certified copies of all lien and judgment documentation.
- Visit the county clerk or trustee for detailed local procedures.
- Consider consulting a title professional for complex lien situations.