Connecticut Foreclosure Surplus Funds: Reclaiming What’s Yours After a Property Sale

If your Connecticut property was recently sold through a foreclosure or tax sale, you might be entitled to "surplus funds." These are the remaining proceeds from the sale after all outstanding debts, liens, and costs associated with the foreclosure have been paid. It’s a common misconception that once a property is foreclosed upon, all equity is lost. Often, there’s money left over, and that money legally belongs to the former homeowner.

What Are Surplus Funds and How Do They Arise?

Surplus funds occur when a property sells for more than the total amount owed by the former owner. This "total amount" includes the mortgage balance, property taxes, interest, penalties, and all the legal and administrative costs of the foreclosure process. If the sale price exceeds this cumulative total, the excess is considered surplus.

For example, if your home was foreclosed upon with an outstanding mortgage balance of $200,000, $10,000 in unpaid property taxes, and $15,000 in foreclosure costs, the total amount owed would be $225,000. If the property then sold for $250,000, there would be $25,000 in surplus funds. This $25,000 rightfully belongs to you, the former homeowner.

How Connecticut Law Addresses Surplus Funds

Connecticut law is clear on the disposition of surplus funds. According to Conn. Gen. Stat. § 49-27, after a foreclosure by sale, the court clerk is responsible for distributing the proceeds. First, the costs of the sale are paid, then the foreclosing creditor