overage at foreclosure auction - Posted by Ken

Posted by Rick, the Probate Guy on February 07, 2010 at 23:59:44:

Generally, overages may be claimed by successive recorded interests. This would usually mean that each verifiable successive interest would be entitled on a pro-tanto basis.

Many States have homestead laws, either statutory or affirmed claims, that may protect some or all of the owner’s interest, but this is usually subject to any voluntary liens like mortgages & TD’s.

In CA, when there is sny doubt about claimants’ interests(s), the foreclosure trustee (attorney in other States) will choose to interplead the money with the local county Superior Court and get out of the way.

50 States with very independant legislators means no two are exactly the same. Read the code applicable to your State. Stop speculating and start actionating.

overage at foreclosure auction - Posted by Ken

Posted by Ken on February 07, 2010 at 09:44:19:

I took an option on a sub2 property and sold the option to a guy who bought the property,my pay was a second mortgage.The guy fixed the house and then lost it to foreclosure.At the auction the bank bid what was owed and 2 other people bid it up another $8000. I held a second mortgage for $15000 I believe I should be getting the balance left after the first is paid.The referee told me to call attorney for plaintiff but it seems to me the referee should be handling the money not the attorney for the first mortgage holder.My attorney is on vacation till wednesday but I will contact him then.What does everyone here think should happen

Depends on which State… - Posted by JT-IN

Posted by JT-IN on February 07, 2010 at 15:20:50:

Folks who ask a foreclosure question need to include which state the property is located. What IS in one state, ISN’T in another, so ALL answers depend on where the property is located.

As a general rule you would be correct, overage goes to secured Jr lender. But there are exceptions to that rule, partly depnding upon where the property is located, and partly based on whether you acted in a way to protect your rights as a secured lender. Did you in any way answer the complaint so as to protect your rights…?

Re: Depends on which State… - Posted by Ken

Posted by Ken on February 07, 2010 at 15:40:39:

NY state.No I did not answer the complaint.If I do not get it where would it go?

Power of Sale or Judicial Procedure? - Posted by JT-IN

Posted by JT-IN on February 08, 2010 at 01:52:33:

Depends whether Power of Sale was used or a strict judicial procedings. The below statute is for POS.

N.Y. RPA. LAW § 1413 : NY Code - Section 1413: Distribution of proceeds of sale.

(d) Upon entry of an order pursuant to section fourteen hundred eighteen of this article providing for same, to the holder of any subordinate mortgage or lien, or to the owner of the equity of redemption or any person or entity having filed a notice of claim against the property, from the then remaining proceeds the amount then due to such person or entity, in the priority thereof, or so much as the then remaining proceeds will pay.

  1. All surplus moneys arising from the sale after payment of the amounts due under paragraphs (a), (b) and © of subdivision one of this section shall be paid to the county treasurer for the county in which the sale took place by the person conducting the sale within five days after the same shall be received then remaining proceeds will pay…

Sounds like since you didn’t answer the suit and establish your claim, that the Treasurer will have the funds. There is no doubt a procedure for any claimaint to make a claim against said unclaimed funds. Often times the procedings is not complex, and if the mtg was held personally you may not need an Atty to make such a claim; if held by an entity most states require legal representation.

You have likely fallen to an unsecured creditor status and will now bid by all other unsecured creditors for such funds. If you claim was next by lien priority you should be the legal winner of such funds. If there were other claims such as tax liens, et al, then you may be left out of the bidding. What is usually required is when you make a claim you will have to notify everyone who has/had an interest in the property; all lien holders of record by cert mail. They must be notified of your claim and give them an oppty to bid for the funds too. The next highest claim will win the right to funds distribution.

I would contact the Treasurer’s Offc and ask them how you go about making claim to unclaimed overage funds from a foreclosure action. They should be able to help you from there. Good luck and report back to let us know how this turns out, then we will all learn something here by your process.

Re: Depends on which State… - Posted by Bill H

Posted by Bill H on February 07, 2010 at 16:35:04:

Ken:
The first tenent of RE Law 101 is “The courts do no look with favor to those who sit upon their rights.”

SO, do as JT-IN says…find out how and where and file the necessary paperwork to get your $$$.

Good Luck,
Bill H