Foreclosure surplus funds in North Carolina
When a foreclosure sale brings in more than the debt and the costs, the difference does not go to the lender. In North Carolina it is paid to the Clerk of Superior Court, and the former owner may be entitled to it.
How surplus funds work
Where the money goes
From the sale price, the trustee pays the costs of the sale and the foreclosed debt. Anything left over is paid to the people entitled to it, or deposited with the Clerk of Superior Court.
N.C.G.S. 45-21.31
Who may be entitled
Junior lienholders, such as a second mortgage or a judgment creditor, are paid in order of priority. Whatever remains after them belongs to the former owner.
When there is a dispute
If more than one party claims the money, the Clerk can decide who is entitled to it in a special proceeding.
How to claim surplus funds in Mecklenburg County
Confirm there is a surplus. Check the trustee’s final report in the foreclosure file, or ask the Clerk’s office whether funds were deposited.
Ask the Clerk what is required. The Clerk’s office can tell you how to request the funds and what documentation it needs.
Check for other liens. A second mortgage, judgment or tax lien may be paid first. If others are competing for the money, talk to an attorney.
Be wary of recovery companies. Letters offering to recover your surplus for a percentage are common. You can apply to the Clerk yourself.
The bigger lesson
A surplus means there was equity in the house. An auction almost never captures full market value, so a homeowner with equity usually keeps far more by selling before the sale date than by claiming a surplus afterwards. If a sale has not happened yet, see selling before foreclosure in Charlotte.
Frequently asked questions
What happens to extra money from a foreclosure sale in NC?
After the costs of sale and the debt are paid, the trustee pays the surplus to those entitled to it or deposits it with the Clerk of Superior Court. Junior lienholders are paid first; the rest belongs to the former owner.
How do I find out if there are surplus funds?
Check the trustee’s final report in the foreclosure file, or ask the Clerk of Superior Court’s office in the county where the house was sold.
Do I need a company to claim my surplus funds?
No. You can apply to the Clerk yourself. An attorney can help if other creditors are claiming the same money, but you do not need to give a recovery company a large share.
Is it better to sell before the foreclosure sale if I have equity?
Usually, yes. A market sale typically brings more than an auction, and the equity comes to you at closing rather than through a claim afterwards.
General information for Charlotte and Mecklenburg County homeowners. It is not legal, tax or financial advice. Terri Lombardo is a licensed real estate broker, not an attorney or tax adviser.
Free HUD-approved housing counseling is available to North Carolina homeowners through the NC Housing Finance Agency on 1-888-442-8188.
Is there equity in your house?
If the sale has not happened yet, there may be a better way to keep it. Tell us what you owe and your sale date, and we will tell you honestly what your options are.
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