Surplus Funds After Foreclosure: Why You Need an Attorney and How Legal Fees Work
If you’ve gone through a foreclosure in North Carolina or are the heir of someone who has and discovered there are surplus funds—money left over after the property sale—you might wonder: Do I really need an attorney to claim it? The short answer: yes, in most cases. Here’s why, and how attorney fees typically work.
What Are Surplus Funds After Foreclosure?
Surplus funds are the remaining proceeds from a foreclosure sale after the mortgage and associated costs are paid. These funds often belong to the former property owner, but claiming them isn’t always straightforward. The Clerk of Court holds these funds until legal entitlement is proven.
Related Reading:
· How to File a Surplus Funds Petition
Why You Need an Attorney for Surplus Funds Claims
While it may seem simple, the Clerk’s decision is based on legal entitlement, notice, and priority of claims. This process involves:
Identifying all parties who may have a claim (owners, heirs, lienholders)
Reviewing recorded liens or judgments
Determining if estates or heirs are involved
Ensuring proper service and notice
Even when a surplus funds claim looks straightforward, the Clerk can’t assume it is. The Clerk only knows what the foreclosure file and public record show, and the case becomes “straightforward” only after the file contains competent proof that no one else has a superior right to the funds.
That means showing—not guessing—that common complications are absent: missing heirs, unserved interested parties, judgment liens, unreleased deeds of trust, HOA or tax claims, bankruptcy issues, or breaks in the chain of title. Any one of those can change who gets paid and in what order.
That is why an attorney matters. The attorney’s job is to make the case straightforward on paper—by reviewing the record, identifying and eliminating issues, and presenting the title facts in a form the Clerk can rely on (often through an affidavit of title with supporting exhibits). In short: it isn’t straightforward because it seems straightforward; it’s straightforward because the record proves it.
The Role of the Affidavit of Title
In many North Carolina counties, the Clerk requires an attorney-prepared affidavit of title as a core document. This sworn, notarized statement summarizes:
The chain of title leading up to foreclosure
Potential claimants and lienholders
Recorded judgments affecting distribution
Why the petitioner has standing to request disbursement
Without this affidavit, hearings often get delayed—or worse, the Clerk refuses to release funds until proper documentation is provided. This is why attorney involvement is practically essential.
How Attorney Fees Work in Surplus Funds Cases
Attorneys typically use one of two billing models:
Contingency Fees (Percentage-Based)
This is often marketed as “no recovery, no fee.” The lawyer takes a percentage of the recovered surplus—commonly around 33⅓%.
Example: $30,000 surplus → $10,000 fee
Example: $150,000 surplus → $50,000 fee
While this can make sense for small or uncertain claims, it becomes disproportionately expensive when the surplus is large.
Hourly Billing (Time-Based): Why It’s Usually Better
Hourly billing charges for actual work performed—title review, drafting, service, hearings, and disbursement steps. This keeps fees proportionate to effort, not the surplus amount.
Many attorneys allow fees to be paid from the recovered funds, so clients often avoid large upfront costs.
Choosing the Right Attorney
At DLDonovan Law, we focus on:
Preparing Clerk-required proof correctly, including affidavits of title
Using an hourly structure to keep fees fair and tied to actual work
Moving cases efficiently from filing to disbursement
Bottom Line
If you want surplus funds released quickly, the Clerk needs reliable proof of entitlement—and in most counties, that means an attorney-prepared affidavit of title. Hiring an attorney is often the difference between an efficient disbursement and months of delay. Choosing hourly billing over contingency fees helps you keep more of what’s yours.
FAQs
What are surplus funds after foreclosure?
They’re leftover proceeds from a foreclosure sale after debts are paid.
Do I need an attorney to claim surplus funds in NC?
Yes, most Clerks require attorney-prepared documentation, including an affidavit of title.
How much do attorneys charge for surplus funds recovery?
Contingency fees can be 33⅓% or more; hourly billing is often more cost-effective.
Ready to Recover Your Surplus Funds?
Contact DLDonovan Law today for a streamlined, cost-effective process.