How to File a Surplus Funds Petition in North Carolina

When a foreclosure sale produces money left over after the permitted costs and debts are paid, that remaining amount is commonly referred to as surplus funds. North Carolina’s foreclosure statutes provide that, in several situations, the surplus is paid into the Clerk of Superior Court’s office in the county where the sale occurred (for example, when the person conducting the sale cannot locate the person entitled to the surplus, is in doubt, or when adverse claims are asserted). N.C.G.S. § 45-21.31 - Disposition of proceeds of sale; payment of surplus to clerk.

Once surplus is paid into the clerk’s office under N.C.G.S. § 45-21.31, a claimant typically seeks disbursement by filing a petition that initiates a special proceeding under N.C.G.S. § 45-21.32. N.C.G.S § 45-21.32 - Special proceeding to determine ownership of surplus.

Surplus Funds Petition Checklist:

• Correct county (where the foreclosure sale occurred / funds held by the clerk)

• Statutory basis cited: § 45-21.31 and § 45-21.32

• Foreclosure identifiers: file number, property address, surplus amount

• All claimants identified (anyone who filed a claim or is known to assert a claim)

• Correct legal names (suffixes, exact entity names, name-change explanations)

• Petition structure: standing, parties, request for determination, exhibits list

• Summons prepared for each respondent + service plan under Rule 4

• Filing costs ready: special proceeding filing fee + service fees (if applicable)

What is a “special proceeding” in the context of surplus funds?

 A special proceeding is a statute-created civil matter that begins with a petition and is commonly heard by the Clerk of Superior Court. For surplus funds specifically, the statute authorizes “a special proceeding … before the clerk of the superior court” to determine entitlement.

Special proceedings are generally governed by the North Carolina Rules of Civil Procedure unless a statute provides otherwise. N.C.G.S § 1-393 - Rules of Civil Procedure applicable to special proceedings.

What the petition asks the Clerk to do

A petition for surplus funds asks the clerk to determine who is entitled to the money paid into the clerk’s office and to enter an order directing disbursement. The statute also requires that certain other claimants be joined as parties.

Step-by-step: the petition process

Step 1: File in the correct county

The petition is filed with the Clerk of Superior Court in the county where the foreclosure sale occurred and the surplus was paid into the clerk’s office. For clerk office locations and contact information by county, the Judicial Branch maintains a county directory: https://www.nccourts.gov/locations

Step 2: Identify and name all parties who may claim the funds

Before drafting, identify every person or entity that may have a claim to the surplus. Under § 45-21.32(b), you must name as parties all persons who filed a notice of claim with the clerk and those who, as far as the petitioner knows, assert any claim to the surplus. This is where petitions often need correction—names should match the record (including suffixes like Jr./Sr. and exact entity names).

Step 3: Draft the petition with enough foreclosure detail to locate the underlying file

The petition should include the identifying information the clerk needs to cross-reference the underlying foreclosure matter and the deposit of funds, such as:

• the foreclosure file number or other clerk reference number,

• the property identification (address and/or legal description reference),

• the fact that surplus funds were paid into the clerk’s office under § 45-21.31, and

• the petitioner’s basis for claiming entitlement.

Step 4: Use a clear petition structure

A well-drafted petition typically includes:

• Caption identifying it as a special proceeding before the Clerk of Superior Court

• Introductory allegations (foreclosure identifiers + confirmation surplus is held by the clerk). 

• Standing/interest (why petitioner is entitled)

• Parties (each petitioner/respondent and the nature of their potential claim)

• Request for determination / prayer for relief (determine entitlement; order disbursement)

• Exhibits supporting the chain of entitlement (record documents)

Step 5: Attach exhibits that support the entitlement “chain”

Exhibits vary by fact pattern, but the goal is the same: give the clerk a clean record to confirm (1) why the funds are held and (2) why the petitioner is entitled. The statutory framework ties the petition to funds paid into the clerk’s office under § 45-21.31.

The summons in a surplus funds special proceeding

If the proceeding includes respondents, North Carolina’s special proceeding statutes requires a summons be issued for each respondent.  A summons is a court form that must be completed by the petition and:

• tells the respondent to appear and answer within 10 days after service (in most special proceedings),

• is issued and signed by the clerk (or assistant/deputy clerk),

• indicates it is issued in a special proceeding, and

• is served under Rule 4 service methods. Rule 4 of the North Carolina Rules of Civil Procedure. This can be a very complicated part of the process and is a primary reason why an experienced attorney is needed to complete a claim.   

Contested petitions: what changes if someone disputes entitlement

A surplus funds petition becomes “contested” when a party files an answer raising issues of fact about who owns the funds. Under § 45-21.32(c):

• the proceeding must be transferred to the civil issue docket of Superior Court for trial, and

• upon transfer, the clerk may require a party asserting a claim by petition or answer to post a $200 bond for costs (or otherwise comply with G.S. 1-109).

The statute also provides that the court may, in its discretion, allow a reasonable attorney’s fee for the prevailing party to be paid out of the funds in controversy and must tax costs against losing parties who asserted a claim by petition or answer.

Filing fees and common costs to expect

Court costs depend on the details of the case, but the Judicial Branch’s published costs chart lists the baseline special proceeding filing costs (effective January 1, 2025) as:

• $120.00 total for “Special Proceedings (except foreclosures)” (General Court of Justice fee + facilities fee + telecommunications/data connectivity fee).

  The same chart notes a possible additional fee in certain “proceedings involving land,” with a stated cap.

If the sheriff serves process under Rule 4, North Carolina statutes set a $30.00 fee for each item of civil process served (including summons) in a civil action or special proceeding. N.C.G.S § 7A-311 - Uniform civil process fee.

(Fees can change; the Judicial Branch posts updated cost charts.)

When hiring an attorney can be helpful

A surplus funds petition is often straightforward when the record is clean and there is no competing claim. It can become more complex when:

• identifying and joining all required parties is not clear from the record (or names/entities have changed),

• there are potential competing claims that may make the petition contested under § 45-21.32(c), or

• service issues arise under the special proceeding summons process and Rule 4.

An attorney can handle party identification, drafting that matches the statute’s joinder requirements, proper summons/service steps, and (if needed) the transfer posture if the matter becomes contested. Doing it right the first time is important.  Errors in the drafting and service of the petition can costs months of delay and ultimately require an attorney to intervene and correct.  Reach out to us today for a free consultation.  If we take your claim, there are no upfront costs. We only get paid when the funds are released to your client.

Donovan Law: Help With Petitions for Surplus Funds in North Carolina

If your property—or a loved one’s property—has been lost to foreclosure in North Carolina, you may still have money on the table in the form of surplus funds. But those funds don’t come automatically. Filing a Petition for Surplus Funds correctly is the key to protecting your rights.

At Donovan Law, we focus on surplus funds and foreclosure-related matters across North Carolina. We help former owners, heirs, and other interested parties navigate the petition process from start to finish.

If you believe surplus funds may be available, or if you’ve received a notice from the clerk or trustee, contact Donovan Law today to schedule a consultation. We’ll review your situation, explain your options, and help you take the right steps to recover the funds you may be entitled to.

Request a free consultation about a North Carolina surplus funds petition.