How to Claim Surplus Funds From Foreclosure in Georgia

When a property undergoes foreclosure in Georgia, and the sale generates more funds than necessary to cover debts owed to creditors and lienholders, the remaining amount is known as surplus funds. These excess proceeds represent the former homeowner’s equity recovered through the sale. Georgia’s legal framework ensures these funds are returned to the rightful parties. This article guides you through claiming these funds.

Confirming Surplus Funds and Eligibility

Confirming the existence of surplus funds after a Georgia foreclosure sale is the initial step for a potential claimant. This information is typically found in public records. You can locate details regarding the sale and any surplus at the county courthouse, specifically through the Clerk of Superior Court, or at the sheriff’s office in the county where the foreclosure occurred. Some counties may also provide online access to excess funds lists.

Understanding the “priority of liens” in Georgia is important when considering eligibility for these funds. When a property is foreclosed, the proceeds from the sale are distributed in a specific order. Senior lienholders, such as the primary mortgage lender, are paid first, followed by junior lienholders, which can include second mortgages, tax liens, or judgment liens. Only after all secured creditors and superior lienholders are satisfied are any remaining funds considered surplus and potentially available to the former owner.

The primary individuals eligible to claim surplus funds are the former owner(s) of record at the time of foreclosure. If the original owner is deceased, their heirs may be eligible to claim the funds. The entity that conducted the foreclosure sale, such as the foreclosing attorney or the county, typically holds these funds and is legally obligated to disburse any overages beyond what was owed to them.

Gathering Claim Information and Documents

Claiming surplus funds requires the collection of specific information and documentation to substantiate your right to the money. Complete documentation helps prevent delays in the claiming process.

You will need to gather full legal names of all former owners, current contact information, the property address, and the exact date of the foreclosure. If known, the name of the foreclosing entity and the case number associated with the foreclosure proceedings are also helpful.

Proof of ownership at the time of foreclosure is essential, typically demonstrated through a recorded deed or title documents. You will also need proof of identity for all claimants, such as a driver’s license or state-issued ID.

For cases involving a deceased original owner, a death certificate and relevant probate documents, such as Letters Testamentary or of Administration, are necessary to prove heirship or legal representation of the estate. Any court orders or judgments pertaining to the property should also be included. Some entities holding funds may require a sworn affidavit or statement asserting your right to the funds and disclaiming any other known claims, and they might provide specific forms for this purpose.

Submitting Your Claim

Once all necessary information and documents have been gathered and prepared, the next step involves formally submitting your claim for surplus funds. In Georgia, this process often begins by filing a petition or motion with the Superior Court in the county where the foreclosure took place. This legal filing requests the court to order the disbursement of the surplus funds to you.

When preparing the petition, it is important to include the required legal language, a clear “prayer for relief” stating what you are asking the court to do, and proper formatting according to court rules. After drafting, the petition must be filed with the Clerk of Superior Court in the appropriate county. Filing fees for general civil cases in Georgia Superior Courts are typically around $211-$218, in addition to service fees.

A crucial step in this process is the service of process, which requires providing official notice of your claim to all interested parties. This includes the foreclosing attorney, any known junior lienholders, and potentially other former owners. Permitted methods of service under Georgia law include certified mail or service by the sheriff’s office, with sheriff’s service fees typically around $50 per service.

After proper filing and service, the court may schedule a hearing where a judge will review your claim and any other asserted claims. If the court approves your claim and there are no competing claims or disputes, the judge will issue an order directing the holder of the funds, such as the Clerk of Court or the foreclosing attorney, to disburse the surplus funds to the rightful claimant(s).

Resolving Competing Claims

Situations where multiple parties assert a claim to the same surplus funds are common in Georgia. When such competing claims arise, the holder of the funds, which could be the foreclosing attorney or the Clerk of Court, may initiate an “interpleader” action. This legal action involves depositing the disputed funds with the court and asking the court to determine who is rightfully entitled to them. This process shifts the responsibility of determining rightful ownership from the fund holder to the court.

During interpleader proceedings, the court will typically hold a hearing where each claimant presents evidence to support their asserted right to the funds. Claimants bear the burden of proof to demonstrate their entitlement. The types of evidence presented can include lien documents, proof of ownership, or heirship documents. The court applies Georgia law, specifically the “priority of liens” principle, to determine the order of disbursement among creditors, and then to the former owner(s). This means that valid liens are generally satisfied in their order of priority before any remaining funds are distributed to the former property owner.

Given the complexities of interpleader actions and the need to effectively present a case within legal frameworks, claimants often find it beneficial to seek legal counsel. An attorney experienced in surplus funds recovery can navigate the court process, understand the intricacies of lien priority, and help present the strongest possible argument for entitlement to the funds. Legal fees for such representation may, in some cases, be paid from the excess funds upon order of the court.