How to Claim Foreclosure Surplus Funds in California

California has two main surplus systems. A trustee’s sale is the out-of-court foreclosure of a deed of trust, and its surplus rules are in Civil Code sections 2924j and 2924k. A tax-defaulted property sale is run by the county tax collector, and the leftover money, called excess proceeds, is governed by Revenue and Taxation Code sections 4675 and 4676. If your home was foreclosed through a court case instead, ask the clerk of the superior court that handled the case how the surplus is being held.

Trustee’s sale surplus

Who is paid, in order

The trustee pays out the sale proceeds in this order Civ. Code §2924k(a):

1. The costs of the sale, including the trustee’s fees and the attorney’s fees the law allows.
2. The loan secured by the deed of trust that was foreclosed.
3. Junior liens and encumbrances, in order of priority.
4. The trustor (the former owner) or the trustor’s successor in interest. If the property had been sold or transferred, the vested owner of record at the time of the sale.

The trustee may also charge for distributing the surplus. A fee of $100 or less, or $125 when there are junior liens, is conclusively presumed reasonable §2924k(b).

The notice and the 30-day claim window

Within 30 days of executing the trustee’s deed, the trustee must send written notice by first-class mail to everyone with a recorded interest in the property just before the sale who was entitled to the foreclosure notices. The notice says there was a sale, that you may have a claim to the remaining proceeds, and how to contact the trustee §2924j(a).

Your claim must be in writing and signed under penalty of perjury. The statute says it states the amount of the claim as of the sale date and an itemized statement of principal, interest and other charges, and that it must be received by the trustee no later than 30 days after the date the trustee sends the notice §2924j(a). A lender may also have to prove it holds the debt, for example with the original promissory note. If you are the former owner, ask the trustee in writing what proof of your interest it wants.

When the trustee cannot decide

If no one disputes the priority of the claims, the trustee pays within 30 days after the notice period ends. If the trustee has not settled priority within 90 days after the notice period, it must, within 10 more days, deposit the money with the clerk of the superior court or file an interpleader action §2924j(b). Before a deposit, the trustee mails everyone a notice that claims must be filed with the court within 30 days of that notice. The court considers the claims within 90 days after the deposit, and a deposit of $35,000 or less is a limited civil case §2924j(d).

Surplus that a trustee still holds and is not required to deposit with the court falls under California’s Unclaimed Property Law §2924j(g).

Tax-sale excess proceeds

When a county sells tax-defaulted property for more than what was owed, the remainder is excess proceeds, California’s version of a tax-sale overage. If the excess is more than $150, the county must mail notice of the right to claim it to the parties of interest no later than 90 days after the sale, and, if it cannot find an address, publishes the notice in a local newspaper unless that would cost more than the excess Rev. & Tax. Code §4676.

The one-year deadline

A party of interest files a claim with the county before one year after the tax collector’s deed to the buyer is recorded, and a mailed claim must be postmarked on or before that date §4675(a). The county can require whatever information and proof its board of supervisors sets, so use the county’s claim form §4675(d).

Order of priority

Lienholders of record before the tax deed was recorded come first, in order of their priority. Next is anyone who held record title to all or part of the property before the tax deed was recorded. Payment is ordered by the board of supervisors no sooner than one year after the tax deed is recorded §4675(e). If your claim is denied, an action to review that decision must be filed within 90 days of the decision §4675(g).

Heirs

If an owner of record has died, the heirs may support their claim with an affidavit under the Probate Code’s small-estate procedure, which starts at section 13100 §4675(f). Our guide for heirs claiming surplus funds covers the general steps.

Documents to gather

• The trustee’s notice (trustee’s sale) or the county’s notice of excess proceeds (tax sale), with the sale date and the property address or parcel number.
• Your written claim, signed under penalty of perjury for a trustee’s sale, or the county’s claim form for a tax sale.
• Identification and proof of your interest, such as the recorded deed.
• For lenders and other lienholders: proof you hold the debt, such as the original note, and an itemized statement of what is owed §2924j(a).
• For heirs: the small-estate affidavit described above, or probate papers if an estate is open. Ask the county what it needs with the affidavit.

Paid surplus helpers: what California law says

• Trustee’s sale surplus. California’s foreclosure-consultant law covers anyone who, for compensation, offers to help an owner get the remaining proceeds from the foreclosure sale of their home Civ. Code §2945.1(a). It is a violation for a foreclosure consultant to enter into an agreement to help an owner arrange the release of surplus funds after the trustee’s sale, whether through direct payment, assignment, deed, power of attorney or any other compensation §2945.4(h). California-licensed attorneys acting as attorneys are excluded from the definition §2945.1(b).
• Tax-sale excess proceeds. We could not confirm a percentage cap. The statute does set conditions. After the sale, the right to claim can be assigned only by a dated written document that says so explicitly, after each side discloses what it knows about the value, and an assignment that does not comply has no effect §4675(b). Anyone who files for you must prove they told you the amount and source of the excess proceeds and that you can file directly with the county at no cost §4675(c).

In both cases you can file yourself. See how to claim surplus funds yourself and our overview of surplus recovery companies.

If the money went unclaimed

Search the State Controller’s unclaimed property database. Our guide to unclaimed and escheated surplus funds explains that process.

California foreclosure surplus funds move on short clocks after a trustee’s sale, 30 days from the trustee’s notice, and on a one-year clock after a tax sale. Compare other states in our surplus funds by state table, and confirm your dates with the trustee or county that handled the sale.