How are proceeds from a foreclosure sale disbursed?
Upon filing the certificate of title, the Clerk of Court disburses the proceeds of the sale pursuant to the order set forth in the final judgment, which typically denotes the following priority: a) costs of the foreclosure sale; b) judgment held by plaintiff; c) liens held by junior lien holders (according to priority); and d) surplus proceeds to the defendant (or whomever owns the equity of redemption at the time of the sale). Entitlement to proceeds does not depend on the party actively defending the suit. Even a defaulted party may participate. Because a senior lienholder’s security interest is not terminated by foreclosure of a junior lien, it is not entitled to share in a surplus fund.
