Disposition of Surplus Funds from Foreclosure Sale in NC

[virs]

What is the name of your state? NC

Here is the scenario.

Property has two leins.

Lien A – 50K - Senior
Lien B – 30 K - Junior

Lien B forecloses. “The sale is made subject to all prior liens, unpaid taxes, special assessments, easements, rights of way, deeds of release, and any other encumbrances or exceptions of record”. The opening bid was 25K. However, due to bidding war at the auction, the highest bid was 45K.

My question is what happens to the surplus 20K. Does this get applied to the first lien so that the person who gets the title after the auction subtracts this amount from the Lien A to get the Lien A? The part I amnot sure is that the sale was held SUBJECT TO. Therefore, does the surplus need to be applied to any superior liens or will go to the original owner?

I have looked at the NC statutes 45-21.31 and 32 but its not very clear.

http://www.ncga.state.nc.us/gascripts/Statutes/StatutesTOC.pl?Chapter=0045

 

[pty]

What is the name of your state? NC

Here is the scenario.

Property has two leins.

Lien A – 50K - Senior
Lien B – 30 K - Junior

Lien B forecloses. “The sale is made subject to all prior liens, unpaid taxes, special assessments, easements, rights of way, deeds of release, and any other encumbrances or exceptions of record”. The opening bid was 25K. However, due to bidding war at the auction, the highest bid was 45K.

My question is what happens to the surplus 20K. Does this get applied to the first lien so that the person who gets the title after the auction subtracts this amount from the Lien A to get the Lien A? The part I amnot sure is that the sale was held SUBJECT TO. Therefore, does the surplus need to be applied to any superior liens or will go to the original owner?

I have looked at the NC statutes 45-21.31 and 32 but its not very clear.

http://www.ncga.state.nc.us/gascripts/Statutes/StatutesTOC.pl?Chapter=0045

I’m confused. If the liens totaled 80K and the property sold for 45K (to a third party I'm assuming) then there’s no surplus. There wasn't even enough money to pay off the 1st lien.

 

[LindaP777]

What is the name of your state? NC

Here is the scenario.

Property has two leins.

Lien A – 50K - Senior
Lien B – 30 K - Junior

If the Lien Holder B foreclosed, then they get nothing from the sheriff's sale. All of the money ($45k) would go the Lien Holder A.

Now, let's assume for a minute you made a typo, and the house sold for $145k at the sheriff's sale and there is a surplus. First to be paid is the county for any back taxes. Second to be paid is the 1st Mortgage Holder, then the second Mortgage Holder, then any other liens (paid in the order they were filed) until the money is gone. If there is a surplus, it goes back to the home owner who was foreclosed upon. (This would be a rarity, because if there was that much equity in the house, they would have sold it to get out from under all the debt, instead of having the house foreclosed on and that black mark against the.)

 

[mdcsoft]

$20k is a surplus

Sorry, but he said that the 2nd foreclosed. That means that whomever bids is bidding "subject-to" the 1st. So the $45k bid goes to the 2nd. The buyer still has to satisfy the 1st and any other superior liens. However, because the 2nd was only owed $30k, the attorney handling the foreclosure must turn the additional money over to any other junior lienholders, if any, and then to the homeowner.

In some states, the homeowner will have to petition the courts to get the money. Until then, it'll sit in a court account somewhere. This is sometimes done by state law, but more often done because the foreclosing attorney doesn't want to get sued by the homeowner or another creditor. So they file an "interpleader action" with the court and give them the money. Now they're off the hook.

The 1st can still foreclose on the new owner, and probably will, unless the new owner works something out with them separately.

 

[virs]

Sorry, but he said that the 2nd foreclosed. That means that whomever bids is bidding "subject-to" the 1st. So the $45k bid goes to the 2nd. The buyer still has to satisfy the 1st and any other superior liens. However, because the 2nd was only owed $30k, the attorney handling the foreclosure must turn the additional money over to any other junior lienholders, if any, and then to the homeowner.

Thanks for the info. This makes sense.