Surplus Funds – What to do after a foreclosure sale.

Montana homeowners facing a foreclosure sale should understand that they have a right to pursue surplus funds from the sale. This right to pursue surplus funds also extends to junior lienholders whose liens were not satisfied at the time of sale.

In Montana, we have a non-judicial foreclosure process for most residential real estate. This means that the holder of your mortgage note (called a Trustee) conducts a sale if the homeowner fails to make mortgage payments. Surplus funds are the monies that are leftover after the mortgage debt and associate sale costs are paid.

At the conclusion of the sale, the Trustee is required to remit surplus funds to the County Clerk and Recorder. The Trustee must notify the homeowner and any lienholders of the amount of the surplus funds and that the funds have been deposited with the County.

From here, Montana’s surplus funds procedure allows anyone with an “interest”—typically the homeowner or a junior lienholder who did not get paid from the Trustee sale, to request that the Court disperse the surplus funds. In cases where there are multiple requests to the Court for disbursement, then the Court has the authority to determine how and in what order parties will be paid. Montana allows recovery of attorney’s fees and costs for this type of action. Attorney fee recovery can help a lienholder and homeowner offset the cost of the Court action to recover these surplus funds.