Disbursement Of Funds After Foreclosure Sale
I would like to find out the specifics, of how the fund are handled after the property is bought at the foreclosure sale. In other words, when someone purchases a property at the sale and hands over the money to the auctioneer, who exactly handles the disbursement. Also if there is more paid for the property then what is needed to cover all liens, where does go initially, and what happens to it. I understand this process generally, but more interested in specifics, especially for California.
Thank You.
The disbursement of auction funds is the duty of the foreclosing trustee, unless there is an interpleader action in which the trustee is unable to determine the priority or validity of a claim.
I'm not sure who physically holds excess funds, either the trustee or the county treasurer, but it is the trustor is who is entitled to the overbid. The trustor will typically submit a notarized affidavit requesting the overbid from the foreclosing trustee in order to claim the funds.
If the property sells to an outside third party bidder, funds owed to the lender/beneficiary will paid .If The sale nets more money than the amount owed to the first mortgagee. This excess is called a “surplus.” Surplus remaining after a foreclosure sale should be paid to the junior lienholders in accordance with the priority of their liens on the property and that only after the liens have been satisfied may any surplus be disbursed to the owner of the equity of redemption.
The trustee normally holds funds in trust.
If the property reverts to the lender/beneficiary at the sale, a Deed will be issued to the lender and the lender will have ownership to the property securing the debt.
Now not every thing is black and white when it comes to real estate see:
http://www.scu.edu/law/FacWebPage/Neustadter/sdbook/main/cases/mdfc_greenbrer.html
[addsig]