By Brian Figeroux, Esq.

In New York, when a foreclosed property is sold for more than the outstanding mortgage debt and associated costs, the excess funds are known as surplus monies. These funds are deposited with the court and can be claimed by individuals or entities with a legitimate interest, such as junior lienholders or the former property owner. The process for claiming these funds is governed by Real Property Actions and Proceedings Law (RPAPL) §1361.

This guide provides a comprehensive, step-by-step overview of how to collect surplus monies following a foreclosure sale in New York.

Step 1: Understand Eligibility to Claim Surplus Monies

Before initiating a claim, it’s essential to determine if you have a legitimate right to the surplus funds. Potential claimants include:

• Former Property Owners: Individuals who owned the foreclosed property.
• Junior Lienholders: Entities or individuals holding liens that were subordinate to the foreclosed mortgage, such as second mortgages, judgment liens, or tax liens.
• Other Creditors: Parties with a financial interest in the property.

According to RPAPL §1361(1), any person claiming the surplus monies arising upon the sale of mortgaged premises may file a notice of claim. 

Step 2: Monitor the Foreclosure Sale and Report

After the foreclosure sale, the appointed referee will prepare a Report of Sale, detailing the sale proceedings and any surplus generated. This report is filed with the County Clerk’s office. It’s crucial to:

• Obtain a Copy of the Report: Visit the County Clerk’s office to secure a copy of the Referee’s Report of Sale.
• Verify Surplus Funds: Confirm that surplus monies have been deposited with the court.

The New York State Unified Court System provides guidance on surplus money proceedings, emphasizing the importance of the Referee’s Report and the deposit of surplus funds. 

Step 3: File a Notice of Claim

To assert your right to the surplus funds:

• Prepare a Written Notice: This notice should state the nature and extent of your claim and provide your contact information or that of your attorney.
• File with the Appropriate Clerk: Submit the notice to the clerk in whose office the Report of Sale is filed.

RPAPL §1361(1) specifies that this notice can be filed at any time before the confirmation of the Report of Sale. 

Step 4: Await Motion for Confirmation and Court Proceedings

Following the filing of your notice:

• Motion for Confirmation: On the motion for confirmation, or within three months thereafter, the court will address the distribution of surplus monies.
• Notification: The court will notify all parties who have appeared in the action or filed claims.
• Reference Appointment: The court may appoint a referee to ascertain and report the amount due to each claimant and determine the priority of liens.

RPAPL §1361(2) outlines this procedure. 

Step 5: Participate in the Referee’s Hearing

If a referee is appointed:

• Attend the Hearing: Be present to present evidence supporting your claim.
• Provide Documentation: Submit relevant documents, such as lien records, judgments, or proof of ownership.
• Establish Priority: Demonstrate the validity and priority of your claim relative to others.

The referee will evaluate all claims and submit a report to the court with recommendations for distribution.

Step 6: Court’s Confirmation and Distribution Order

After reviewing the referee’s report:

• Court Confirmation: The court will confirm or modify the referee’s findings.
• Distribution Order: An order will be issued directing the distribution of surplus monies according to the established priorities.

This process ensures that surplus funds are allocated fairly among rightful claimants.

Step 7: Receive Surplus Funds

Upon the court’s order:

• Disbursement: The County Clerk or another designated official will disburse the surplus funds to the approved claimants.
• Finalization: Ensure you receive the correct amount as determined by the court.

Conclusion

Collecting surplus monies in a foreclosure action under RPAPL §1361 involves a structured legal process designed to ensure equitable distribution among eligible claimants. By understanding your eligibility, diligently monitoring proceedings, and adhering to the required steps, you can effectively claim any surplus funds to which you are entitled.

Given the complexities involved, consulting with a legal professional experienced in New York foreclosure law is advisable to navigate the process successfully.

  #AttorneyAdvice, #ClaimSurplusFunds, #ClaimYourFunds, #CourtOrder, #CourtProceedings, #FigerouxAssociates, #FinancialClaims, #ForeclosureClaims, #ForeclosureCourt, #ForeclosureProcess, #ForeclosureRecovery, #ForeclosureReport, #ForeclosureSale, #LawFirm, #LegalAdvice, #LegalGuidance, #LegalHelp, #LegalProcess, #LegalRights, #Lienholders, #MortgageForeclosure, #NewYorkAttorney, #NewYorkLaw, #NewYorkLawyer, #NYCForeclosure, #NYCRealEstate, #PropertyOwnerRights, #PropertyRights, #RealEstateAttorney, #RealEstateLaw, #RealPropertyLaw, #RPAPL1361, #SurplusFundClaims, #SurplusMonies