Property owners, creditors and other interested parties who have been named in a foreclosure action due to an interest they have in real property may have the right to make a claim for any remaining surplus proceeds.
When a bank or mortgage loan servicer files for foreclosure, they are generally required to name all necessary parties as defendants in the lawsuit. Necessary parties in foreclosure actions include owners of the property, as well as any other party that holds a mortgage, lien or other interest in the property. After the judgment of foreclosure is entered and the applicable redemption period expires, the property can be sold at a sheriff’s sale. If the price obtained at sale is greater than the amount of the judgment, a surplus is created.
Wisconsin has specific statutes that govern what happens with sheriff’s sale proceeds, which may include surplus proceeds. Section 846.16, Stats. provides that the proceeds from the sale are deposited with the clerk of court until paid to the “parties entitled thereto.” The plaintiff is automatically paid the amount of their judgment and costs in the order confirming the sale. But any other party that has an interest in the property is responsible for asserting that they are entitled to receive any surplus funds. These parties can include other creditors or lien holders, but also the prior owner of the property. Section 846.162, Stats. provides a way for other parties to file a motion for the payment of any surplus proceeds.
What happens to any surplus proceeds if no one makes a claim?
The clerk of court will hold any remaining surplus proceeds until a party requests that they be disbursed. If no other party make such a request, the funds will simply remain on deposit with the clerk.
The attorneys at Gimbel, Reilly, Guerin and Brown LLP understand the needs of creditors and other parties named in foreclosure actions who may need to appear and assert their right to make a claim for surplus in foreclosure actions. If you find yourself in need of the advice of a Milwaukee or Wisconsin attorney with experience in these matters, contact one of the attorneys at Gimbel, Reilly, Guerin and Brown LLP to discuss your case.