January 23, 2026
When a property is sold at a California trustee’s sale, the foreclosure process doesn’t always end with the lender getting paid. In many cases, the sale generates surplus (or “excess”) foreclosure proceeds—money that may legally belong to the former owner, a trust, heirs, or junior lienholders.
Understanding how surplus foreclosure proceeds work in California, who is entitled to them, and how to claim excess proceeds can make the difference between recovering thousands of dollars—or losing the funds entirely.
This guide explains the process step by step.
In California’s standard nonjudicial foreclosure, the trustee distributes the winning bid in a strict statutory order under California Civil Code §2924k:
Once junior liens are satisfied, the owner of record at the moment of sale (or that owner’s legal successor) is entitled to the remaining funds.
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If surplus funds exist, the foreclosure trustee must send written notice within 30 days after the sale to everyone who held a recorded interest immediately before the foreclosure, including:
This notice explains that surplus funds are available and that a claim must be filed within a short statutory window, particularly if the trustee plans to deposit the funds with the court.
This process is governed by Civil Code §2924j and the Judicial Council’s CIV-170 form.
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If claims are straightforward and uncontested, the trustee may distribute surplus funds directly by applying the priority rules in §2924k—paying junior lienholders first and then issuing payment to the owner or successor.
If there is any dispute or uncertainty about priority, the trustee files a CIV-170 petition and deposits the funds with the California Superior Court.
The court must:
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Courts look for two things:
A strong claim package typically includes:
Many California properties are titled in family trusts. In these cases:
Generally, the trustee of the trust should file the claim.
Courts typically require:
If the trustee is deceased or unavailable, successor-trustee documentation—or in some cases a Probate Code §17200 proceeding—may be required.
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If no claim is made, funds may ultimately be treated as unclaimed property under California law—making recovery far more difficult.
Speed matters.
California’s Rule 7.3 limits live, targeted solicitation. Educational content, search ads, videos, and inbound landing pages explaining how to claim surplus foreclosure proceeds in California are permitted when done properly with required disclaimers.
Who gets surplus foreclosure funds in California?
Junior lienholders first; then the owner of record at the time of sale or their legal successor.
My home was in a trust—can I still recover funds?
Yes. Typically the trustee files the claim using a Certification of Trust.
Do I need to go to court?
If funds are deposited with the court or there’s a dispute, a hearing is required.
This article is for educational purposes only and does not constitute legal advice. Surplus proceeds claims are time-sensitive and fact-specific. If you believe you may be entitled to excess foreclosure proceeds, consult a qualified California attorney promptly.
