Where do Surplus Funds come from?
Regardless of who owns a piece of real property, or land, the taxes, homeowner’s association dues, and mortgage must be paid. If these are not paid, the lender can foreclose on the land and any home on the property. The goal of the foreclosure is to recover the money owed to the lender due to back taxes, overdue homeowner’s association dues, or the unpaid mortgage, as well as any attorney fees associated with pursuing the foreclosure action, plus interest. On occasion, the land may sell for more than is owed. This results in “Surplus Funds,” which are deposited with the clerk of court.
Who is entitled to this money?
The “rightful owners” of the property are entitled to file a petition to claim the money (NCGS § 45-21.32). A rightful owner may be the former owner of the land, an heir, or another creditor who might be entitled to the money. If the Clerk of Court believes you may be a rightful owner, you may receive a letter from the Clerk of Court informing you that this money is being held.
How can I claim this money?
In order to make a formal claim for the money, the former owner, heir, or creditor must file a legal action known as a Petition to Determine Ownership of Surplus Funds. This Petition should inform the court as to the existence of the money, who the rightful owners should be, and how the money should be distributed. After filing the petition, the person filing the petition (i.e., the petitioner) would need to prove that everyone is aware of the action and inform them of the hearing date (i.e., formally served in accordance with NC Rules of Civil Procedure, Rule 4).
How can an Attorney help?
Of course, the Clerk will need to see more than just a statement that you are the heir or the rightful owner of the property. An attorney will conduct a title search to ensure that the heirs or owners of the property have been correctly identified and ensure that they have a valid claim to the money. A title search may also reveal potential creditors who have claims against the land, owner, or the estate of the original owner of the property or any heirs. The attorney can ensure that all paperwork has been properly prepared, filed, and served so that the hearing will be as straightforward as possible.
If you have received a letter from the Clerk of Court saying that you may be entitled to money due to a surplus fund from a foreclosure or other action, the attorneys at Stott, Hollowell, Windham & Stancil, PLLC are here to help guide you through the process.
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