Right to leftover money (surplus) after a trustee sale
Cal. Civ. Code § 2924k(a)(4)
In plain words
If a trustee sale brings in more than the loan, costs and junior liens, the rest goes to you, the former owner. The trustee pays the costs, the foreclosing loan and then junior liens first. You usually must file a claim with the trustee to get the money.
Who is protected
Former owners (trustors) whose California home sold at a trustee sale for more than was owed.
When it applies
- Only in California.
- Only after the foreclosure sale.
What you can do
Ask in writing
Send the trustee a written claim for the surplus with proof of your ownership and current address.
Deadline: As soon as possible after the sale; follow the deadline in the trustee’s notice
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Our California page explains the whole process step by step, with its sources and free local help.
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Honest limits
- Junior lienholders are paid before you, so there may be little or nothing left.
- Beware of “surplus recovery” companies that charge large fees for a claim you can file yourself.
- This is general education, not legal advice. Laws change and details depend on your papers and your court; check the current law or ask a lawyer or legal aid.
The law
- State lawOrder for distributing trustee-sale proceeds
Cal. Civ. Code § 2924k(a)(4)
Exact part: (a)(4)
What it says: After costs, the debt and junior liens, the remaining proceeds go to the trustor or successor.
Read the official texthttps://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV§ionNum=2924k - State lawSurplus notice and claims
Cal. Civ. Code § 2924j
What it says: The trustee must notify people who may have a claim to surplus and explain how to claim it.
Read the official texthttps://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV§ionNum=2924j
Court cases
- Homeowner wonSame topicYvanova v. New Century Mortgage Corp.
Yvanova v. New Century Mortg. Corp., 62 Cal. 4th 919 (2016)
a borrower may bring a post-sale wrongful-foreclosure claim by alleging that the assignment to the foreclosing party was void
- Homeowner lostSame topicMartins v. BAC Home Loans Servicing, L.P.
Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249 (5th Cir. 2013)
a mortgage servicer acting for a properly assigned mortgagee may foreclose in Texas without possessing the original note, and an oral promise to modify a large loan is not enforceable
- Homeowner lostSame topicMilton v. U.S. Bank National Ass'n
Milton v. U.S. Bank Nat'l Ass'n, 508 F. App'x 326 (5th Cir. 2013) (per curiam) (unpublished)
an agreement to delay a Texas foreclosure falls within the statute of frauds and must be in writing to be enforced
- Homeowner lostSame topicBFP v. Resolution Trust Corp.
BFP v. Resol. Tr. Corp., 511 U.S. 531 (1994)
the price received at a non-collusive foreclosure sale that complied with state law is reasonably equivalent value under the Bankruptcy Code
Related rights
Protection from owing more after a trustee sale (anti-deficiency)
Cal. Code Civ. Proc. § 580d(a)
After a nonjudicial trustee sale in California, the lender cannot collect the difference between the sale price and what you owed. Separate rules also protect many purchase loans on homes of up to four units that the buyer lives in.
Read this rightThe government cannot keep your home equity beyond the tax debt
U.S. Const. amend. VTakings Clause
If your home is taken or sold to pay property taxes, the government may collect what you owe, but it may not keep the extra value. Keeping the surplus is a "taking" of your property without just compensation, which the Fifth Amendment forbids (Tyler v. Hennepin County, 2023). You may be able to claim the surplus, but you usually must follow your state's claim process and deadlines.
Read this rightAfter a discharge, creditors cannot collect the wiped-out debt from you
11 U.S.C. § 524(a)(2)
A bankruptcy discharge wipes out your personal liability for most debts in the case. After that, the law forbids creditors from suing, calling or otherwise trying to collect a discharged debt from you personally. A court can hold a creditor in contempt if there was no fair doubt that its conduct was barred.
Read this rightRenters get at least 90 days' notice after a foreclosure
12 U.S.C. § 5220 note(Pub. L. 111-22, div. A, § 702(a)–(b))
If you rent a home that goes through foreclosure, the new owner must give you a notice to move at least 90 days before you have to leave. If you have a real (bona fide) lease signed before the foreclosure notice, you can usually stay until the lease ends. The exception is when the new owner will live in the home; even then you still get the 90 days' notice.
Read this rightRight to redeem after a court (judicial) foreclosure sale
Cal. Code Civ. Proc. § 729.030(a)–(b)
If your California home is sold through a court (judicial) foreclosure, you may be able to buy it back after the sale. The period is three months if the sale paid the whole debt, or one year if it did not. There is no redemption after a regular trustee (nonjudicial) sale.
Read this rightRight to claim excess proceeds after a tax sale
Cal. Rev. & Tax. Code § 4675(a)(1)
If the county sells your property for more than the taxes and costs, the extra money (excess proceeds) can be claimed. Any party of interest, including the former owner, can file a claim with the county within one year after the tax deed is recorded. California had this process before the 2023 Tyler v. Hennepin County decision.
Read this right