The United States has two primary methods for foreclosing on properties: judicial and non-judicial foreclosure. The type used in your state affects not only how the foreclosure process works but also how surplus funds are handled and claimed.

Understanding these differences is essential for successfully recovering surplus funds from your foreclosure.

Understanding foreclosure types

The type of foreclosure affects how you claim surplus funds

What Is Judicial Foreclosure?

Judicial foreclosure is a court-supervised process. The lender must file a lawsuit against the borrower and obtain a court order to foreclose on the property.

How It Works:

  1. Lender files a lawsuit in court
  2. Borrower is served with legal papers
  3. Borrower has opportunity to respond and contest
  4. If lender prevails, court issues judgment of foreclosure
  5. Property is sold at court-supervised auction
  6. Sale proceeds are distributed under court supervision
  7. Surplus funds are held by the court

Key Characteristics:

  • Timeline: Typically 6 months to 2+ years
  • Court involvement: Extensive — all steps require court approval
  • Surplus handling: Funds held by court registry
  • Claim process: File motion with the court

What Is Non-Judicial Foreclosure?

Non-judicial foreclosure doesn't require court involvement. The lender follows procedures outlined in the mortgage or deed of trust and state law to foreclose without filing a lawsuit.

How It Works:

  1. Lender issues notice of default to borrower
  2. Waiting period (varies by state)
  3. Lender records notice of sale
  4. Property is sold at public auction (often at courthouse steps)
  5. Trustee distributes proceeds according to priority
  6. Surplus funds held by trustee or county

Key Characteristics:

  • Timeline: Typically 3-6 months
  • Court involvement: None (unless borrower contests)
  • Surplus handling: Held by trustee or county treasurer
  • Claim process: File claim with trustee or county

Side-by-Side Comparison

Judicial Foreclosure

  • Court-supervised process
  • Longer timeline (6-24+ months)
  • More borrower protections
  • Surplus held by court
  • Claim filed with court clerk
  • May require attorney
  • More formal procedures

Non-Judicial Foreclosure

  • No court involvement
  • Shorter timeline (3-6 months)
  • Faster for lenders
  • Surplus held by trustee/county
  • Claim filed with trustee/county
  • Often simpler process
  • Less formal procedures
State foreclosure laws

Each state has different foreclosure laws affecting your claim

Which States Use Which Method?

Primarily Judicial Foreclosure States:

  • Connecticut
  • Delaware
  • Florida
  • Hawaii
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maine
  • New Jersey
  • New Mexico
  • New York
  • North Dakota
  • Ohio
  • Oklahoma
  • Pennsylvania
  • South Carolina
  • Vermont
  • Wisconsin

Primarily Non-Judicial Foreclosure States:

  • Alabama
  • Alaska
  • Arizona
  • Arkansas
  • California
  • Colorado
  • Georgia
  • Idaho
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • Nevada
  • New Hampshire
  • North Carolina
  • Oregon
  • Rhode Island
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • Virginia
  • Washington
  • West Virginia
  • Wyoming

Note: Some states allow both methods, with the choice depending on the type of mortgage document used. Always verify the specific process used in your foreclosure.

How This Affects Surplus Fund Claims

In Judicial Foreclosure States:

  • Where funds are held: Court registry or clerk's office
  • How to claim: File a motion or petition with the court
  • Documentation: May need to follow court filing procedures
  • Timeline: Court schedules can cause delays
  • Competing claims: Court determines priority among claimants

In Non-Judicial Foreclosure States:

  • Where funds are held: Trustee, county treasurer, or county clerk
  • How to claim: File claim form with the holding entity
  • Documentation: Typically simpler administrative process
  • Timeline: Often faster than judicial states
  • Competing claims: Trustee or county determines distribution

Finding Your Surplus Funds

Based on the foreclosure type:

Judicial Foreclosure:

  1. Contact the court clerk where the foreclosure was filed
  2. Request information about surplus funds from your case
  3. Ask about the procedure for filing a claim
  4. Obtain any required forms

Non-Judicial Foreclosure:

  1. Identify who conducted the sale (trustee company)
  2. Contact the trustee about surplus funds
  3. If trustee transferred funds, contact county treasurer
  4. Check county unclaimed property records

Not Sure Where to Start?

We research your foreclosure to determine exactly where surplus funds are held and handle the claim process for you. Free consultation.

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The Bottom Line

Whether your foreclosure was judicial or non-judicial affects where surplus funds are held and how you claim them. Judicial foreclosures involve court procedures, while non-judicial foreclosures are typically handled administratively.

Regardless of the type, surplus funds that belong to you don't disappear — they're held somewhere waiting to be claimed. The key is knowing where to look and how to file your claim properly.