Washington — How to Recover Surplus Proceeds After a Foreclosure

Can I recover surplus proceeds after a foreclosure sale in Washington?

If a foreclosure sale generated more money than necessary to pay the lender, costs, and higher‑priority liens, the remaining funds (“surplus” or “excess proceeds”) may belong to the former owner or other lienholders. Washington law governs how those proceeds are distributed after a trustee or sheriff sale. This article explains the practical steps to ask a court to determine your right to any surplus proceeds and to obtain distribution of the funds where appropriate.

Detailed answer — Step-by-step process

1. Confirm whether a surplus exists.

   Start by locating the foreclosure sale documents: the trustee’s sale statement, trustee’s deed (or sheriff’s deed for judicial foreclosures), sale ledger, and the recorded trustee’s deed or certificate of sale. Compare the sale price to the amounts paid to lienholders and costs. If the sale price exceeded the secured debt(s) plus sale expenses, a surplus likely exists.

   If you do not have these documents, get copies from the county recorder/auditor where the property is located or request records from the trustee or beneficiary who conducted the sale.

2. Identify who holds the money.

   In many nonjudicial deed‑of‑trust foreclosures, the trustee disburses sale proceeds. If no party claims the surplus, it may have been deposited with the county or the court. Contact:

   • The trustee or trustee company that ran the sale;
   • The beneficiary (lender) listed in the foreclosure papers;
   • The clerk of the superior court or the county treasurer/auditor in the county where the sale occurred.
3. Request an accounting and make an administrative demand.

   Send a written, dated demand to the trustee and the beneficiary asking for a written accounting of sale proceeds and for payment of any surplus. Include proof of identity and documentation showing you are the former owner or otherwise entitled to the funds (e.g., recorded deed or heir documents if you represent an estate).

   Keep copies and send by certified mail or another method that provides a receipt.

4. If administrative demand fails, prepare to file in superior court.

   In Washington you typically file a motion or petition in the superior court in the county where the property is located asking the court to determine rights to the surplus and order distribution. The exact name of the filing can vary (common options include a petition for distribution of sale proceeds, a petition to determine rights to surplus funds, or an interpleader action when multiple parties claim the funds).

   Your filing should generally include:

   • A clear caption with the court and parties;
   • A concise statement of the facts (ownership, lien history, foreclosure sale date and price, accounting of disbursements);
   • Copies of key documents (deed, deed of trust or mortgage, trustee’s deed or sale record, notice of sale, accounting of proceeds);
   • A request that the court (a) declare who is entitled to the surplus, (b) order distribution of funds accordingly, and (c) award costs or attorney fees if applicable;
   • Proposed orders and a proposed distribution schedule if known.

   Because rules and local forms vary, check the superior court’s local rules and form pages before filing.

5. Serve notice on potentially interested parties.

   After you file, you must serve notice on the trustee, the lender/beneficiary, recorded junior lienholders, and any other potential claimants. The court may require publication if some claimants are unknown. Proper service is essential so the court can distribute funds without later disputes.

6. Attend hearings and be ready to prove your claim.

   At the hearing the court will review the evidence and competing claims. Be ready to show proof of ownership, payoff ledgers showing the amounts paid to lienholders, and any documents showing why you, as the former owner or estate representative, are entitled to the surplus.

7. Possible outcomes.

   The court may:

   • Order distribution of the surplus to you (or another rightful claimant);
   • Order distribution among multiple claimants in priority order; or
   • Deny your claim if you cannot prove entitlement.

   If multiple claimants exist, the court can require the funds be deposited with the court and then issue a distribution order (an interpleader-like resolution).

8. After distribution.

   If the court awards you money, expect to provide identification, complete any releases the court requires, and account for potential tax consequences. If the amount is substantial, consult a tax professional about federal and state tax reporting obligations.

Important Washington statutes and resources

Washington’s law on deeds of trust and nonjudicial foreclosure is found in RCW chapter 61.24. That chapter explains procedure for trustee sales and related duties: RCW chapter 61.24.

For local filing requirements, forms, and guidance about superior court procedure look at the Washington Courts site: Washington Courts – Self Help. Also contact the clerk of the superior court in the county where the property was located for local forms and filing fees.

Helpful hints

• Gather documents first: deed, deed of trust or mortgage, notices of default and sale, trustee’s deed or certificate of sale, sale ledger, payoff statements, and death certificates or probate documents if you represent an estate.
• Act quickly. While exact limitations differ depending on the claim you bring, delays can make it harder to locate funds, collect records, or win a dispute against other claimants.
• Start with a written demand to the trustee and beneficiary. Sometimes a prompt letter and documentation will lead to payment without court.
• Contact the county clerk or treasurer where the sale occurred to ask whether surplus funds were deposited with the county or court.
• If multiple people claim the funds (heirs, second lienholders, assignees), expect the court to hold a contested hearing or to require interpleader-style resolution.
• Consider hiring an attorney experienced in real estate foreclosure and post-sale distributions. An attorney can prepare pleadings, handle service, and present accounting evidence at the hearing.
• Use free or low-cost legal resources if cost is a concern: local legal aid, the Washington State Bar Association’s lawyer referral service, or court self‑help centers.
• Keep careful records: certified mail receipts, accounting requests, and copies of every document you file or receive.

Where to get more help

If you need help identifying the holder of the surplus or preparing court papers, contact the superior court clerk in the county where the foreclosure sale occurred or consult a Washington real estate attorney. The Washington Courts self‑help pages and county court clerk websites often list local filing procedures and fee schedules.

Disclaimer: This article provides general information about Washington law and practical steps to pursue surplus foreclosure proceeds. It is not legal advice and does not create an attorney‑client relationship. For advice specific to your situation, consult a licensed Washington attorney.