Foreclosed Home Sold for More than Owed — Now What?

Foreclosed Home Sold Excess Funds RefundLast updated May 14, 2018.

You’ve fallen behind on your mortgage and now your home is in foreclosure. At the sheriff’s sale, the bank will try to sell the home for as much as it can get. If it sells for less than you owe, you may be liable to pay the difference. But what happens if it sells for more than you owe?

Below, we’ll address Ohio foreclosure law and how you can get excess funds from a foreclosure.

Ohio Foreclosure Law: How does it work?

Ohio is a judicial foreclosure state. This means that in order for a secured party (lender) to foreclose on a delinquent property, it must proceed by filing an action in court. Once the court has issued an order allowing the lender to sell the subject property, the sheriff can hold the sale in accordance with the specific provisions set out in the Ohio Revised Code which determine how and when the sale may be conducted.

But what if your property sells at foreclosure for more money that is owed? Who gets the excess funds? Are you entitled to any of the money? If the property sells for more than the debt asserted by the lender in the foreclosure action, then any additional liens against the property will be satisfied in the order of their priority with the remaining funds from the sale. That means the money will be used to pay off the holder of a second mortgage, for example. If after paying the lender in the foreclosure action and satisfying any other liens on the property, there is still an excess, you do have a right to that money!

How do I get excess funds from a foreclosure sale?

If your property is sold at foreclosure, any funds remaining after the sale that have not been used to pay off the liens held by your mortgage company or other lienholders will be remitted to the court. If there are excess funds after all other liens have been satisfied, you as the owner of the property at the time of the sheriff’s sale must file a motion to distribute the balance of the funds. This motion must be filed with the clerk of the court that issued the order of sale of the property.

Many counties in Ohio have specific local rules for their individual courts that address what the motion must contain. For example, in Hamilton County, Local Rule 45 of the Court of Common Pleas requires a motion requesting supplemental distribution. It also requires the motion to contain the specific reasons why the party filing the motion (movant) is entitled to those funds. Some counties, like Cuyahoga County, may have a sample motion to distribute form on their website. There, you can simply fill in the pertinent information, print the motion, and file it in accordance with the local rules.

Once you have filed your motion to distribute, it is your responsibility to schedule a hearing with the court on the motion. It is also your responsibility to serve the plaintiff from the foreclosure action and all other interested parties who are not in default with a copy of your motion and a notice of the hearing date and time.

How long do I have to claim a foreclosure overage?

Ohio statute specifies the manner, location, and time for which excess funds are held, per Ohio Revised Code §5721.20:

Except in cases where the property is transferred without sale to a municipal corporation, township, county, community development organization, or county land reutilization corporation pursuant to the alternative redemption period procedures contained in section 323.78 of the Revised Code, any residue of moneys from the sale or foreclosure of lands remaining to the owner on the order of distribution, and unclaimed by such owner within sixty days from its receipt, shall be paid into the county treasury and shall be charged separately to the county treasurer by the county auditor, in the name of the supposed owner. The treasurer shall retain such excess in the treasury for the proper owner of such lands upon which the foreclosure was had, and upon demand by such owner, within three years from the date of receipt, shall pay such excess to the owner. If the owner does not demand payment of the excess within three years, then the excess shall be forfeited to the delinquent tax and assessment collection fund created under section 323.261 of the Revised Code, or in counties that have established a county land reutilization corporation fund under section 323.263 of the Revised Code, to the county land reutilization corporation fund. 

Therefore, once the excess funds have been remitted from the sale, you, as the owner at the time of the sale, have sixty (60) days to file your motion to distribute excess funds with the court. Be advised that you should inquire with the court on a regular basis about the status of any excess funds following the sale to ensure you do not miss any information. If the sixty (60) days have expired, you can contact the county treasury to determine if excess funds are being held in your name.

Best Resources for Foreclosure

If you have a property that has been or will be sold at foreclosure or if you know someone in that situation, you should use the resources available to you. Contact the clerk of your court where the foreclosure sale has been filed and ask about their process for notifying owners about excess funds. But remember that the clerk cannot give you legal advice. If you are concerned that you may be entitled to excess funds and need additional guidance, consulting a real estate expert or an attorney who practices in the area of foreclosure and post-sale issues will help you understand your rights and the steps you should take.

If you’re dealing with foreclosure in Ohio, contact us today for a free consultation with one of our experienced local attorneys. We can explain your options for stopping the foreclosure and help you decide what path is best for you.

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About Russ Cope

Russ B. Cope is dedicated to legal standards that go far beyond filing cases — he is interested in your goals. Russ wants to be certain that each client is making an informed decision that will make their life better, and thrives on the interaction between lawyer and client.