Foreclosure Surplus Funds: Who Gets the Money Left Over?
When a foreclosed property sells for more than what is owed plus allowed costs, the extra money is often called surplus funds or excess proceeds. In 2023, the U.S. Supreme Court held in Tyler v. Hennepin County that a county that sold a home for unpaid property taxes could not keep the value above the tax debt. How a former owner claims surplus depends on the state and the type of foreclosure: often a claim or motion is filed with the court, and other lienholders may have priority. State attorneys general have warned about companies that charge large fees to recover surplus that owners can often claim themselves.
What the law says
- In Tyler v. Hennepin County, a Minnesota county seized Geraldine Tyler's condominium over about $15,000 in unpaid real estate taxes, interest, and penalties, sold it for $40,000, and kept the $25,000 excess for itself. U.S. Supreme Court, Tyler v. Hennepin County, No. 22-166 (May 25, 2023)
- The Supreme Court held that Tyler plausibly alleged the county's retention of the excess value above her tax debt violated the Takings Clause of the Fifth Amendment. The Court said the county could sell the home to recover unpaid taxes but could not use the tax debt to confiscate more property than was due. U.S. Supreme Court, Tyler v. Hennepin County, No. 22-166 (May 25, 2023)
- The opinion, written by Chief Justice Roberts for a unanimous Court, noted that today most states and the federal government require excess value to be returned to the taxpayer whose property is sold to satisfy a tax debt, and that Minnesota law itself gives a homeowner the surplus when a bank forecloses on a mortgage. U.S. Supreme Court, Tyler v. Hennepin County, No. 22-166 (May 25, 2023)
- Example (Florida, judicial mortgage foreclosure): state law creates a rebuttable presumption that the owner of record on the date the lis pendens was filed is entitled to surplus funds after subordinate lienholders who timely filed a claim are paid. A person claiming as the owner's assignee must prove entitlement. Florida Statutes § 45.032 (2025), Disbursement of surplus funds after judicial sale
- In Florida, surplus that is still undisbursed one year after the sale is presumed unclaimed and must be reported and remitted to the Department of Financial Services, unless a court proceeding over entitlement is pending. Florida Statutes § 45.032 (2025), Disbursement of surplus funds after judicial sale
- Example (New York tax foreclosure, Chautauqua County): under the state Real Property Tax Law, anyone who had a right, title, interest, claim, lien, or equity of redemption in the foreclosed parcel may file a claim with the court for a share of any surplus within three years from the sale. Chautauqua County, NY, In Rem Foreclosure Surplus Funds Instructions
- Chautauqua County's instructions describe the claim steps: get certificates of the surplus on deposit and of other claims filed, file a Notice of Claim to Surplus Monies and a Notice of Motion with the County Clerk, serve the Director of Finance and other claimants, and submit a proposed Order to Distribute Surplus Monies. After the order is entered, checks are mailed less an administrative fee (currently 2%). Chautauqua County, NY, In Rem Foreclosure Surplus Funds Instructions
- Example (New Jersey): in a mortgage foreclosure, the courts say any sale proceeds exceeding the mortgage payoff go back to the debtor. New Jersey Courts, Foreclosure Self-Help
- To withdraw money held by the New Jersey Superior Court Trust Fund, a claimant submits a proposed form of order to the Trust Fund Unit for verification and then files a motion with the appropriate court with adequate proof that the funds belong to them. Funds left untouched for 10 years are treated as abandoned and transfer to the State. New Jersey Courts, Notice: Superior Court Trust Fund monies scheduled to escheat to the State (Mar. 10, 2026)
- Scam warning (New Jersey): the state Attorney General said homeowners do not need to pay a business to apply for surplus funds they are entitled to. Its 2015 settlements involved companies alleged to have charged fees of more than 35% of the value recovered, used contracts that did not state the consumer's share, or implied a court affiliation that did not exist. New Jersey Attorney General, press release on surplus funds recovery settlements (Oct. 15, 2015)
FAQ
Does Tyler v. Hennepin County apply to mortgage foreclosures?
Tyler involved a county that sold a home for unpaid property taxes and kept the excess. The opinion noted that Minnesota law already entitles a homeowner to the surplus when a bank forecloses on a mortgage.
Do I need to hire a company or lawyer to claim surplus funds?
Not necessarily. Chautauqua County, New York, says you can hire an attorney or obtain the court order yourself, while noting surplus actions are legal proceedings that may require an attorney and that county and court staff cannot give legal advice.
How much can a surplus recovery company charge?
It depends on the state. In a 2018 case, Washington's Attorney General said a company charged up to 67% of recovered surplus, and the court order stopped it from collecting more than the 5% allowed by law, plus limited costs.
What warning signs should I watch for?
New Jersey's Attorney General described solicitations claiming surplus would be lost to the government if not recovered quickly or that "time is of the essence," letters that did not identify the property, and contracts that did not state the consumer's share.
Who gets paid first from surplus?
In Florida, subordinate lienholders who timely filed a claim are paid before the owner of record, who is presumed entitled to what remains.
How do I contact the New Jersey Superior Court Trust Fund?
New Jersey's courts list the Trust Fund at SCCOTrustFund.mailbox@njcourts.gov or 609-815-2900 x 54200.
Related
- Buying a Foreclosed Home: What to Know
- What Is a Deed in Lieu of Foreclosure?
- How Long Does a Foreclosure Stay on Your Credit Report?
- The Foreclosure Process Step by Step
- How to Stop or Avoid Foreclosure
- What Is Foreclosure? (Including Pre-Foreclosure and REO)
- Foreclosure & Homeowner Law by state
General legal information, not legal advice. Laws change and local rules can differ; check the linked official source or talk to a lawyer about your situation.