Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Detailed Answer
Under South Carolina law, a foreclosure sale may generate proceeds in excess of the secured debt, fees and costs. These excess proceeds—called surplus funds—belong to junior lienholders or the former owner. Two common foreclosure methods apply:
1. Nonjudicial (Deed of Trust) Foreclosure
When a deed of trust foreclosure occurs, the trustee sells the property at public auction. After applying sale proceeds to the debt, interest, attorney’s fees and auction costs, any remaining balance is surplus. The trustee must pay surplus funds to the debtor or junior lienholder if a valid claim is filed within one year of the sale. See South Carolina Code Ann. §29-3-680 (2020). s.c. code §29-3-680.
2. Judicial Foreclosure
In a judicial foreclosure, the sale occurs under court supervision. After the sheriff applies the proceeds to the judgment, any surplus must be deposited with the court. Interested parties have 60 days from sale confirmation to file a motion for distribution under South Carolina Code Ann. §15-39-720. s.c. code §15-39-720.
To determine if surplus funds remain, an interested party should follow these steps:
- Obtain the foreclosure sale date and case number from the trustee’s notice or local newspaper.
- Visit the county clerk of court’s office to review the foreclosure case file and sale report. Look for a trustee’s or sheriff’s report showing the gross proceeds, debt payoff and residual amount.
- Check the county sheriff’s or trustee’s website for online sale results, auction summaries or surplus registers.
- Contact the trustee (for deed of trust foreclosures) or the clerk of court (for judicial foreclosures) to request a surplus ledger or disbursement statement.
- Verify applicable deadlines: one year for nonjudicial surplus claims; 60 days post-confirmation for judicial surplus motions.
- If you find a surplus, prepare and file the required claim or motion with supporting documents, such as proof of lien priority or ownership.
Helpful Hints
- Keep notices and sale records: Maintain all foreclosure notices, sale advertisements and trustee or sheriff reports.
- Prioritize deadlines: Missing the one-year or 60-day window can bar your claim to surplus funds.
- Confirm lien priority: Junior lienholders must establish their position in writing to qualify for distribution.
- Use online court records: Many South Carolina counties provide searchable dockets and sale summaries on their websites.
- Consult the clerk of court: They can explain the procedure to request and inspect surplus fund ledgers.
- Prepare documentation: Have certified copies of the foreclosure order, sale results and identity proofs ready.