Certain aspects of your homeownership journey can feel complicated, including details like figuring out how to get surplus funds from a foreclosure. Even for Ohio’s experienced foreclosure lawyer, some crucial considerations surround excess proceeds on real estate sales.

Read on to learn more about foreclosures, surplus funds, and how to handle things within the framework of the law.

More About Ohio Foreclosure Law

Foreclosure is when the bank reclaims an asset — like a piece of real estate — if their borrower fails to meet the agreed loan terms. If the mortgage borrower defaults, the bank sells the property at an auction to meet the balance. Sometimes, the sale pays off this loan and there is still some money left over.

In Ohio, the secured party (the bank) starts the foreclosure process on delinquent property to recover the funds the borrower owes them. Here’s how the process might play out:

• Ohio is a judicial foreclosure state, so the first step is always filing a legal claim in court. 
• The court may respond by issuing an order that allows the lender to sell the property. 
• The sheriff holds an auction that meets Ohio’s provisions regarding how and when the sale can proceed. Sometimes, the sale amount exceeds the balance owed.

Are there junior liens (second mortgages) against the property? If so, there’s no avoiding foreclosure and the sale funds will go toward paying off that debt. However, if there is no outstanding debt after the sale, and there’s money left over, the estate may have a right to it.

How Do You Find Out Whether There Are Excess Funds After the Real Estate Foreclosure Sale?

You may know more about how to get surplus funds from a foreclosure, but in reality, you have no way of knowing if that foreclosure sale has generated excess funds–unless the mortgage lender tells you. 

Still, you can keep up-to-date and note the date of the auction in your foreclosure documents. After the auction, talk to the seller. The contact information should also be in your foreclosure paperwork or in a local newspaper where the public notice appeared.

You might also call the loan servicer for the seller’s contact information to ask them directly about excess funds.

So, How Do You Get Surplus Funds From a Foreclosure Sale?

Typically, in Ohio, you will first need to file a legal claim – a Motion to Distribute – to request surplus funds. The court schedules a hearing, and you serve the plaintiff (the bank) in the foreclosure sale with a copy of the motion, notifying them of the hearing’s time and date. In Ohio, you have three years to do this from the date of the auction. 

Once the statute of limitations period passes, these funds might transfer into the Delinquent Tax and Assessment Collection Fund. If so, you may still have access to the funds.

Secure Your Funds Utilizing A Foreclosure Lawyer

Do you still have questions about how to get surplus funds from a foreclosure? Why not hire a foreclosure lawyer in Ohio?

Call Cozmyk Law Offices at 877-570-4440 or fill out our online form for a FREE consultation.