Overage and Surplus Funds Recovery Attorney in Los Angeles County and Orange County

After a trustee’s sale, the buyer’s money is applied to the foreclosing loan, and whatever exceeds the debt with costs is the overage, also called the surplus or the excess proceeds. Overage and surplus funds recovery is the process of proving to the trustee, or to the superior court, that you are the person the Civil Code says should receive it. Fred Yadegar prepares and argues those claims for former owners, heirs, and lienholders whose properties were sold in Los Angeles County and Orange County.

The overage in the trustee’s own arithmetic

The Trustee’s Deed Upon Sale, recorded with the county after the auction, states two figures: the unpaid debt, with the costs added, and the price the buyer paid. The difference between them is the money in play. Take a debt with costs of $431,000 and a winning bid of $512,000. The trustee is holding $81,000 that the foreclosing lender is not entitled to keep.

That figure is the starting point, not the amount you receive. Civil Code §2924k directs the trustee to pay the costs and expenses of the sale first, next the loan that foreclosed, next the junior liens by priority, and the former owner or that owner’s successor in interest after all of them. In the example above, a home equity line of credit with a $22,000 recorded balance would be paid next, leaving $59,000 for the former owner. With no junior liens, the full $81,000 would be.

What a claim has to contain

The trustee’s notice of surplus goes out no more than 30 days after the deed is executed, and claimants have 30 days from the mailing date to file a written claim, signed and sworn under penalty of perjury (Civ. Code §2924j). The claim states the amount sought and the basis for it. Claims nobody disputes are paid within 30 days after the window closes.

For a former owner, the basis is title. The claim has to establish that the foreclosed deed of trust named you as trustor, or that title was vested in you when the sale occurred, and that you are the person on that deed. The supporting record is the grant deed that vested title in you, the foreclosed deed of trust, and government identification, and, where a name has changed, the marriage certificate or court order behind the change. When the owner has died, the estate claims through a representative with authority under the Probate Code, and the documents are different; the path is explained on our page for when the owner has died. A claim that arrives after the window, unsigned, or without proof is passed over while the trustee pays those who met the requirements, which is why we deliver every claim in a form we can prove was received.

Junior lienholders, and the numbers they submit

Most contested surplus claims are contests over priority. A second mortgage lender, a home equity lender, a homeowners association, a judgment creditor, or a taxing authority with a recorded lien stands ahead of the former owner under §2924k, but each of them stands there only for the amount it can prove.

Those amounts deserve scrutiny. A second loan that was paid off years ago may still appear on title because no reconveyance was ever recorded. An association may add collection charges that the Civil Code does not permit. A judgment lien may have lapsed, or may have been recorded against a different person with the same name. When we reduce a junior claim, the difference moves down the line to you. The title problems behind these disputes have their own page.

When the trustee hands the file to the court

A trustee is not a judge. When it cannot resolve who is owed what, it deposits the surplus with the superior court clerk in the county of sale, along with a declaration that lists the claims it could not resolve, and sends each claimant a second notice. Claimants then have 30 days to file with the court. The court sets a hearing, reviews the claims on file, and orders the clerk to distribute the money. A deposit of $25,000 or less is processed as a limited civil case.

At that stage the claim becomes a court filing, and the judge expects the same proof the trustee wanted, in admissible form and in order. We draft the court claim, serve it where the rules require, and argue priority at the hearing; the court’s order then releases the funds.

Funds from older sales

Surplus money that goes unclaimed does not stay with the trustee indefinitely. It may pass to the county, and later to the state’s unclaimed property program, and every hand-off adds an application and a wait. A sale from years back is still worth examining; we trace the money through the recorded documents and the trustee’s file, which is why we ask clients to bring every piece of foreclosure mail they kept. Reading the sale documents is covered on its own page.

This week’s checklist

• Locate the property address, the approximate sale date, and which lender foreclosed
• Set aside any letter from the trustee or from a recovery business, unsigned
• Collect your grant deed, the foreclosed deed of trust, identification, and payoff letters for any other loan on the property
• Forward your mail from the foreclosed address so later notices reach you
• Send us the address; the records review that tells you whether a surplus exists is free

Why this office

Fred Yadegar has been licensed to practice law in California since 2006, State Bar #244184, and handles surplus claims from trustee’s sales across Los Angeles County and Orange County, from the first records request through payment. Recovered funds go into a client trust account; the fee set in your agreement is taken from that account, and the remainder is paid to you with an itemized accounting. There is no fee up front, and our fee is paid only from a recovery. When the record shows no surplus, we say so, and that review costs you nothing.