Know Before You Sign

Got a Surplus Funds Letter?
Here's What to Do First.

After a foreclosure, many people receive unexpected letters or calls claiming they are owed money. Some are legitimate. Others come from unlicensed companies that want a large cut of your funds. Here's how to tell the difference.

Are Surplus Funds Real?

Yes. Surplus funds are real. When a North Carolina property sells at a foreclosure auction for more than the total amount owed — the mortgage balance, costs, and other liens — the extra money is called surplus funds or excess proceeds. By law, those funds belong to eligible claimants, not the lender or the county.

The problem is not the funds themselves. The problem is who is contacting you about them — and what they want in return.

Why You're Getting Letters and Calls

Foreclosure records are public. Third-party companies — sometimes called "surplus recovery agents" or "excess proceeds recovery services" — monitor court records for foreclosure sales that produced surplus funds. They then contact former property owners, heirs, and other potential claimants, offering to recover the funds in exchange for a fee.

These companies are not attorneys. They are not licensed to practice law in North Carolina. They cannot represent you in court, file legal documents on your behalf, or provide legal advice.

Red Flags to Watch For

  • ⚠The letter or caller asks you to sign a contract before telling you how much money is available.
  • ⚠The company asks for a large percentage of your recovery — often 30–40% or more.
  • ⚠The contact uses high-pressure language or claims you must act immediately.
  • ⚠The company is not a licensed NC attorney and cannot tell you who will actually file the legal documents.
  • ⚠The letter looks official but does not come from a court, the Clerk of Superior Court, or a licensed attorney.
  • ⚠You are asked to pay any upfront fees before funds are recovered.

How to Verify Your Surplus Funds for Free

You do not need to hire anyone to find out whether surplus funds exist in your case. You can check yourself:

  1. Go to nccourts.gov and search for your foreclosure case by name, address, or case number.
  2. Look for a Special Proceeding (SP) case in the county where the property was located.
  3. Review the case file for the sale amount and the amount applied to the debt.
  4. Contact the Clerk of Superior Court in that county and ask whether surplus funds are on deposit.

Donovan Law can also research this for you at no charge before you commit to anything.

How a Licensed NC Attorney Is Different

Donovan Law

  • ✓ Licensed and regulated by the NC State Bar
  • ✓ Can file legal documents and appear in court
  • ✓ Bound by professional ethics rules
  • ✓ No upfront attorney's fees
  • ✓ Can challenge competing claims

Third-Party Recovery Agents

  • ✗ Not licensed attorneys
  • ✗ Cannot file legal documents or appear in court
  • ✗ Typically charge a large percentage of recovery
  • ✗ May use high-pressure tactics
  • ✗ Cannot handle legal complications
Attorney's Fees: No upfront attorney's fees. Attorney's fees are calculated at an hourly rate and paid from any funds recovered. If no funds are recovered, you owe no attorney's fees.

Common Questions

Is a surplus funds letter a scam?
Not necessarily. Surplus funds are real and legally belong to eligible claimants. However, many letters come from unlicensed third-party recovery agents, not attorneys. You can verify whether surplus funds exist in your case for free through the NC court system before signing anything.
How do I verify if surplus funds exist in my case?
You can search for your foreclosure case on the NC eCourts portal at nccourts.gov or contact the Clerk of Superior Court in the county where the property was located. Donovan Law can also research this for you at no charge.
Do I have to use the company that sent me the letter?
No. You are free to hire any licensed NC attorney, or to file a claim yourself. You are not obligated to the company that contacted you.
What if I already signed a contract with a recovery agent?
Consult a licensed NC attorney before taking further action. The enforceability of such contracts can depend on the specific terms and circumstances.
Call Now
Free Consultation