Foreclosure & Tax Sale
Understanding the process that creates surplus funds — and how you can reclaim what's rightfully yours.
What Happens During Foreclosure & Tax Sales?
A foreclosure sale occurs when a lender exercises its legal right to sell a property after the owner defaults on their mortgage. The proceeds from the sale are used to pay off the outstanding loan balance and associated costs.
A tax deed sale (or tax lien sale) is initiated by a government entity when a property owner fails to pay their property taxes. The government then sells the property to recover the delinquent taxes.
In both cases, if the final sale price exceeds the total debts owed, a surplus is created. This money — sometimes tens of thousands of dollars — is held by the court or government agency, waiting for the rightful owner to claim it.
Foreclosure Sale
Lender-initiated after mortgage default
Tax Deed Sale
Government-initiated for unpaid taxes
From Default to Surplus — Step by Step
Default & Notice
When a homeowner falls behind on mortgage payments or property taxes, the lender or government entity issues a notice of default. This begins the foreclosure or tax delinquency process.
Legal Process & Filing
A legal proceeding is initiated. For mortgage foreclosures, this may be judicial (court-ordered) or non-judicial. For tax sales, the taxing authority follows a statutory process to eventually sell the property.
Auction / Sale
The property is sold at a public auction to the highest bidder. Sale prices often exceed the total debt owed — especially in competitive real estate markets — generating surplus proceeds.
Debt Satisfaction
From the auction proceeds, the outstanding debts are paid: mortgage balance, tax arrears, attorney fees, and any other liens. Whatever remains is called the surplus or excess proceeds.
Surplus Held by Court/Agency
The surplus funds are held by the county clerk, court, or government agency pending a valid claim from the former owner or other eligible parties within the statute of limitations.
Claim Filed & Disbursement
If a proper claim is filed within the deadline, the funds are released to the eligible claimant. If no claim is filed, the money may be forfeited permanently to the government.
How We Help You Navigate This Process
Many former property owners and heirs have no idea that surplus funds exist — or that they have a legal right to claim them. The process of identifying, documenting, and filing a claim can be intimidating and time-consuming.
That's exactly why Covenant Surplus Funds & Wholesaling, LLC exists. We research your property sale, verify your entitlement, prepare all necessary documentation, and file your claim with the appropriate authorities.
- Nationwide coverage across all U.S. states
- Both foreclosure and tax deed sale expertise
- Heir and estate claim handling
- Strict deadline monitoring and compliance
- 100% contingency — no upfront cost to you
Is Your Former Property Eligible?
If your property was sold at a foreclosure or tax deed auction in the past 1–5 years, there's a strong chance surplus funds may exist. Let us find out for free.
- Property sold at foreclosure auction
- Tax deed sale within statute of limitations
- Sale price exceeded total debt owed