How Much Should It Cost to Get Your Foreclosure Surplus Money Back?

When a home sells at a sheriff's sale for more than what was owed, the extra money is called surplus funds, or an overage. In Indiana, that money sits with the county clerk until the former owner, or someone the owner authorizes, asks the court to release it. It does not arrive automatically, and it does not go to the lender just because the lender ran the foreclosure.

Because the process involves court filings, many owners get calls from companies that offer to handle the recovery for a fee. These companies are legal to hire, and a good one can save real time. The question worth asking is simple: what should that help actually cost?

Fees are negotiated, not fixed

There is no standard price. In real Indiana cases, the same recovery company has charged very different amounts in different counties. In one case involving a deceased owner and multiple heirs, the company took 20 percent of what it recovered. In another case, the agreement filed with the court did not state a percentage at all. In a third case, where the owner was alive, easy to reach, and already knew the money was waiting, the company charged a flat fee of $3,500 on a surplus of about $34,900. That works out to roughly 10 percent.

The pattern is worth remembering. Harder cases cost more: deceased owners, probate court, several heirs, and competing claims all add work. A straightforward case, where one living owner simply needs a motion filed, should cost less. If a company quotes you its highest rate on an easy case, that is a sign to keep shopping.

Read the agreement before you sign

The agreement is the whole deal, so read every page, including any addendum. Things to look for:

• Is the fee a percentage, a flat amount, or missing entirely? If the fee is not stated in writing, do not sign until it is.
• Who pays court costs and attorney fees if the recovery fails? Good agreements say you owe nothing if nothing is recovered.
• Does the company get sole discretion to settle your claim for less? Some agreements allow that. Know it before you agree to it.
• Can the company endorse and deposit the clerk's check in its own account first? That is common, but it means you are trusting the company to send your share promptly.
• Is the agreement exclusive? Most are, which means signing with a second company can create a fight that delays everyone's money.

You can also claim the money yourself

Here is something sales calls rarely mention: the surplus belongs to you, and you are allowed to claim it on your own. One Indiana owner did exactly that. After his sale, he contacted the court himself because he had heard, incorrectly, that his overage had been paid to his lender. The lender's lawyer wrote to the clerk confirming the lender had received only what it was owed, and that the extra money was still sitting with the clerk. That letter cost the owner nothing.

If you want help, hiring a company or an attorney is a reasonable choice. Just compare the fee to the work your case actually needs, get the number in writing, and remember that the clerk's office can tell you, for free, whether surplus money from your sale is being held and how much it is.

The bottom line

Before signing anything, ask three questions. How much money is the clerk holding? What exactly will you charge me, in dollars? And what happens if you recover nothing? A trustworthy company will answer all three plainly, in writing, before you sign. If the answers are vague, the safest move is to call the clerk yourself and start there.

This article is for general information only and is not legal advice. Every case is different; consult a licensed Indiana attorney about your specific situation.