If a Sheriff’s Sale results in more money than needed to satisfy the foreclosure judgment, fees, costs and commissions, the remaining amounts are referred to as “surplus funds”. Junior lien holders and others have the right to make an application for these funds. During the 2007-2008 time frame such applications were quite common. With the real estate bust they have been far less common but there are signs everywhere that real estate values are coming back and so may the opportunity for these applications.
The amount of the surplus funds is not determined until after the successful bidder has paid the balance of the purchase price, all fees are deducted and any other financial transactions related to the Sheriff’s Sale completed. The Sheriff’s Office sends the surplus funds to the Superior Court Trust Fund Unit to be held pending an application for surplus funds. Accordingly, surplus funds may not be immediately available.
Applications for surplus funds are made pursuant to R. 4:64-3. The rule provides that parties named in the foreclosure judgment as well as non-parties may apply for surplus funds. The applications may be presented at any time after the sale, and must be made on notice to all parties named in the foreclosure, including defaulted defendants whose claims were not directed in the writ of execution to be paid out of the proceeds of sale. The application must include an Affidavit or Certification setting forth information about the subject property, an explanation of how the claimant is connected to the foreclosure action, a computation of the amount due, identification of other parties in interest and an explanation of why applicant’s claim is superior, and the movant must attach all supporting documentation. All applications must also include a copy of the Writ of Execution issued as part of the foreclosure action. Other motion formalities, include a Notice of Motion, a proposed form of Order, and a Certification of Service.
Parties named in the foreclosure judgment make their application directly to the Office of Foreclosure; non-parties must make their application to the Chancery Judge in the County where the foreclosure property is located. If there is no opposition to the motion filed directly the Office of Foreclosure, the Office of Foreclosure reports and then recommends to the court a specific order in which the claim(s) should be paid. The report includes the amount due to a lien holder who has filed a claim with the appropriate proofs and the priority of the claims. Applications for Surplus Funds that are opposed will be referred to the county judge for hearing and disposition. Applications made by non-parties, whether or not they are contested, must be filed with and heard by the appropriate county judge.
As with other real estate matters counsel with knowledge and experience in this field will save clients time and expenses. While there are no guarantees given by any firm, experience in this practice area and attorneys who appear regularly before the New Jersey Superior Court Chancery Judges may well make a difference in the results.
