What is a surplus?

When properties go through foreclosure, there are instances where the final sale generates more money than what was owed. This excess amount—known as a surplus—may be available to the former property owner or other claimants. Two common types of foreclosure surpluses are tax deed foreclosure surplus and mortgage foreclosure surplus.

A tax deed foreclosure surplus occurs when a property is auctioned off due to unpaid property taxes. If the winning bid at the tax deed sale exceeds the amount owed in back taxes, the leftover funds—the surplus—may be claimed by the original property owner, provided there are no other outstanding liens or legal claims on the amount.

A mortgage foreclosure surplus, on the other hand, happens when a lender forecloses on a property due to missed mortgage payments and sells it at auction or through the market. If the sale price exceeds the outstanding mortgage debt and related expenses, the remaining surplus may be available to the former homeowner after other creditors or lien holders have been paid.

Our understanding of these surplus funds will help former property owners determine if they have a financial claim and how to navigate the legal processes required to recover them. Whether dealing with tax deed or mortgage foreclosure surplus, being informed is crucial for making the right financial decisions.