Detailed answer
This guide explains, in plain language, how someone in Nebraska can seek money left over after a foreclosure sale (commonly called the foreclosure surplus). It walks through the typical steps to file a special proceeding or petition to recover those funds. This is educational information only and not legal advice. Consult an attorney for case-specific guidance.
How foreclosure surplus claims work in Nebraska (overview)
When a property sells at a foreclosure sale for more than what is owed on the foreclosing lien, the extra money becomes a surplus. Nebraska courts have procedures for distributing that surplus to people with lawful claims, such as the former owner, junior lienholders, or other creditors. The process is handled in the court where the foreclosure sale was conducted.
State statutes and court rules set timing, notice, and filing requirements. For Nebraska statutes related to actions and court procedures, see the Nebraska Revised Statutes online: https://nebraskalegislature.gov/laws/statutes.php
Step-by-step: filing a special proceeding to recover foreclosure surplus funds
- Confirm whether a surplus exists and where the funds are held. Contact the county sheriff, county clerk, or county treasurer in the county where the property sold. Ask for: the foreclosure sale date, the sale report or certificate of sale, and whether the sale produced surplus funds and where the funds are being held.
- Identify the correct court and case number. The foreclosure action will have a case number in the district court (or county court if the foreclosure was handled there). You will normally file your petition in the same court that ordered the sale. If you do not know the case number, the county clerk or clerk of the district court can help you locate the foreclosure case.
- Determine your legal basis to claim the surplus. Typical claimants include the former owner (who may get remaining equity after valid liens are paid) and junior lienholders whose liens were wiped out or reduced by the sale. You must show documentary proof (deed, mortgage, assignment of mortgage, judgment, or other recorded lien) that you have a right to the funds.
- Prepare the paperwork: verified petition or special proceeding pleading. Nebraska courts generally require a written petition asking the court to distribute the surplus. The petition should include: the foreclosure case number; the sale date; the amount of surplus claimed (or a request that the court determine the amount); your connection to the property (owner, lienholder, assignee); supporting documents (deeds, mortgages, assignments, payoff statements, copies of the sheriff’s sale paperwork); and a request for an order directing the county treasurer or sheriff to pay the funds. The pleading is typically verified (sworn) when filed.
- Name and notify interested parties. Serve the petition on everyone who might have a claim to the surplus. That commonly includes: the original mortgagor (former owner), the foreclosing mortgagee, any junior lienholders shown in the public record, and the county treasurer or sheriff holding the funds. If a party’s address is unknown, the court may allow service by publication. Proper service and notice are critical; failure to notify all interested parties can delay or invalidate the proceeding.
- File the petition with the clerk and pay required fees. File the petition in the proper court and pay the court’s filing fee. The clerk will set a hearing date if the matter is contested or may enter an order if nobody opposes the petition and the court finds the claimant entitled to the funds.
- Attend the hearing and present evidence. At the hearing, present documentary proof of your entitlement and any testimony needed to clarify facts (for example, chain of title, amounts owed to senior lienholders). The court will decide competing claims and issue an order directing the disbursement of surplus funds.
- Collect the funds after a court order. Once the court issues an order awarding you funds, the county treasurer or sheriff will disburse the money according to that order. You may need to present the court’s written order and identification at the treasurer’s office to obtain payment.
Typical documents and evidence to gather
- Certificate or report of sale from the sheriff
- Foreclosure case file number and court docket entries
- Deeds, mortgages, assignments, recorded liens
- Payoff statements or payoff calculations for senior liens
- Proof of identity and any documentation showing your interest in the property
- Affidavits (e.g., affidavit of lost instrument) if an original document is missing
Common practical issues
- Multiple claimants. If more than one person claims the surplus, the court will hold a contested proceeding to resolve priorities.
- Unknown claimants. The court may require notice by publication if a claimant’s location is unknown; this extends timelines.
- Time and costs. Filing fees, service costs, and attorney fees (if you hire counsel) can affect recovery. If the surplus is small, it may not be worth pursuing without free or low-cost assistance.
Helpful hints
- Start by contacting the county clerk, sheriff, or treasurer where the sale happened. They can confirm whether surplus funds exist and who is holding them.
- Pull the public records for the property (deeds and liens) before filing. This helps you identify all likely claimants you must notify.
- File in the court that handled the foreclosure. Using the same case number speeds review and avoids jurisdiction problems.
- Use a verified petition and attach clear copies of any recorded documents that support your claim.
- Be careful with service and notice rules. Improper service can cause delays or dismissal.
- If you cannot afford a lawyer, contact Nebraska Legal Aid programs or the Nebraska State Bar Association lawyer referral service for low-cost options. The Nebraska Revised Statutes and court resources are available at the Nebraska Legislature and Nebraska Judicial Branch websites: https://nebraskalegislature.gov/laws/statutes.php and https://supremecourt.nebraska.gov
- If the amount in dispute is small, ask the clerk whether a simplified or uncontested procedure exists.
Example (hypothetical)
Suppose a Douglas County sheriff sale produced a $40,000 surplus. Jane Doe (former owner) believes she is entitled to most of that amount after two junior liens set off against the surplus. Jane contacts the Douglas County treasurer, confirms the funds exist, obtains the foreclosure case number, prepares a verified petition to the court requesting distribution of the surplus, serves the foreclosing lender and known junior lienholders, and asks the court to determine the proper distribution. The court schedules a short hearing, reviews the documents and ordering the treasurer to pay Jane and the junior lienholders according to the court’s distribution order.
Where to find forms and further assistance
Check the clerk of the district court in the county where the property sold for local filing requirements and form availability. General information and court contact details are on the Nebraska Judicial Branch site: https://supremecourt.nebraska.gov. Nebraska statutes and details about civil actions are online at the Nebraska Legislature: https://nebraskalegislature.gov/laws/statutes.php. For attorney help, consult the Nebraska State Bar Association lawyer referral resources.
Disclaimer: This article explains general Nebraska procedures and is for educational purposes only. It does not provide legal advice and does not create an attorney-client relationship. For advice about your specific situation, consult a licensed Nebraska attorney.