Is That Letter About Foreclosure Excess Proceeds a Scam? Here’s How to Tell
Receiving an unexpected letter, postcard, email, text, or telephone call claiming you have money left over from a foreclosure can sound suspicious. Sometimes the money is real. That does not necessarily mean the person contacting you is a court official, government employee, attorney, or trustworthy recovery company.
If you are concerned about an excess-proceeds letter scam, independently verify the court case and the funds before signing a contract or providing sensitive information. A legitimate surplus and a legitimate recovery offer are two separate questions.
Foreclosure excess proceeds are funds remaining after a trustee’s sale once legally required payments have been made. Under Arizona law, trustee-sale proceeds are distributed according to statutory priorities, including sale expenses, the debt secured by the foreclosed deed of trust, certain other secured obligations, and qualifying junior lienholders, before the remaining funds may reach the former owner or the owner of record.
Why Did You Receive an Excess-Proceeds Letter?
You may have received a foreclosure surplus letter because public records indicate that money remained after a trustee’s sale involving property you previously owned.
Private recovery businesses may review court cases, recorded documents, trustee filings, and county records to identify potential claimants. This can allow a company to discover funds before the former homeowner knows they exist.
The recorded surplus, however, is not necessarily the amount you will ultimately receive. Arizona law gives junior lienholders and other qualifying interests priority in certain circumstances. Former ownership alone does not eliminate higher-priority claims.
A Real Surplus Does Not Make Every Offer Trustworthy
A company may correctly identify a real court case and still offer a contract that deserves careful review.
Before responding, separate four issues:
- Do excess proceeds actually exist?
- Has the sender correctly identified you as a possible claimant?
- Are the proposed fee and contract reasonable?
- Is the sender legally authorized to perform the services being offered?
An excess proceeds recovery company may assist without being the court, county, trustee, or a law firm. Likewise, the existence of legitimate money does not prove that a private solicitation is trustworthy.
Case-specific entitlement depends on factors including property title, liens, ownership history, court filings, competing applications, and applicable Arizona law.
How Can You Verify the Claim Independently?
Do not rely exclusively on information printed in the solicitation. Verify the important facts yourself.
Confirm the property address, trustee-sale date, trustee’s name, Superior Court case number, amount deposited, current location of the funds, possible lienholders, and whether someone has already filed an application.
For Maricopa County cases, the Treasurer maintains excess-proceeds information, and the Superior Court of Arizona in Maricopa County provides forms for former owners or trustors seeking release of excess proceeds. The court’s instructions specifically tell applicants to obtain information from the trustee’s complaint, explain that case, and deposit information that can be researched through court and Treasurer records.
This independent review is one of the most important steps you can take to verify an excess proceeds claim.
What Does an Official Court Case Usually Look Like?
When a trustee deposits excess proceeds with the county treasurer under A.R.S. § 33-812, the trustee initiates a Superior Court civil action. The statute provides that the trustee is the plaintiff and the applicable county treasurer is named as the defendant.
For Maricopa County applications, court instructions tell applicants to use the same trustee plaintiff and civil case number, generally beginning with “CV,” that appear in the original complaint. The Maricopa County Treasurer is identified as the defendant.
The complaint may also contain information about interested parties and apparent liens. Arizona law requires the trustee’s filing to include or attach title-related information and an analysis of the apparent priority of potential claimants.
Importantly, the county treasurer does not independently resolve contested entitlement. The Superior Court determines who is entitled to the proceeds, and competing claims may require a hearing.
What Contract Terms Should You Review Before Signing?
Do not focus only on whether a company can locate the money. Review what you are giving the company in return.
Look carefully at:
- Percentage-based or flat fees
- Assignments of your claim
- Power-of-attorney provisions
- Authority to settle
- Responsibility for legal expenses
- Cancellation provisions
- Authority to endorse or deposit checks
- Whether the contract survives termination
- Whether the company is offering legal advice
Arizona places specific restrictions on third-party agreements for recovering trustee-sale excess proceeds. Under A.R.S. § 33-812(P), the agreement must be written, signed by the claimant, and properly acknowledged. An agreement entered during the first 30 days after the trustee’s sale is void and unenforceable.
The statute also provides that non-attorney fees or payments exceeding $2,500, excluding attorney fees and certain costs, are presumed unreasonable and unenforceable unless the court approves additional compensation as reasonable.
What Warning Signs Could Mean the Letter Is Misleading?
Be cautious if a sender provides no property address or court case number, claims the funds will disappear immediately, pressures you to sign during the first call, requests an upfront payment, or promises guaranteed recovery.
Other warning signs include requests for gift cards, wire transfers, or cryptocurrency; email addresses that do not correspond to the claimed organization; someone pretending to be the court or county; refusal to disclose the total fee; contracts transferring the entire claim; or instructions telling you not to contact the court or an attorney.
Even when the unclaimed foreclosure money in Arizona is genuine, those tactics should prompt further investigation.
What Questions Should You Ask the Sender?
Before signing anything, ask:
- What is the Superior Court case number?
- Where are the proceeds currently held?
- What exact amount is on deposit?
- What will I pay in actual dollars?
- Will I remain the owner of my claim?
- Is a licensed Arizona attorney handling the case?
- What happens if another lienholder objects?
- Can I review the complete agreement before signing?
Be especially careful with an assignment or broad power of attorney. Those documents can create rights that go well beyond allowing someone to obtain information about your case.
When Should You Contact an Arizona Foreclosure Excess Proceeds Lawyer?
Consider speaking with an Arizona foreclosure excess proceeds lawyer when substantial money is involved, or the ownership and lien history is complicated.
Legal review can be particularly valuable when there are multiple liens, deceased former owners, divorced co-owners, property held in a trust, bankruptcy proceedings, competing applications, assignments, powers of attorney, or aggressive recovery-company contracts.
A Phoenix foreclosure attorney can evaluate not simply whether money exists, but whether you have a legally supportable claim to some or all of it.
Frequently Asked Questions
Why would a private company know about my foreclosure funds?
Foreclosure filings, recorded property documents, court cases, and excess-proceeds information may be publicly available. Private companies can review those records and contact potential claimants.
Is an excess-proceeds letter from a non-lawyer legitimate?
Possibly. A non-lawyer may offer recovery assistance, but that does not make the communication official or guarantee that the contract is reasonable. Arizona law regulates certain third-party recovery agreements.
Can a recovery company charge a percentage of the proceeds?
Arizona law requires recovery fees to be reasonable. Non-attorney compensation exceeding $2,500 is presumed unreasonable and unenforceable unless the court approves additional compensation.
How do I confirm that money is held by Maricopa County?
Check the case information independently through the Maricopa County Treasurer and Superior Court resources. The court’s application instructions explain how applicants can locate the case number and deposit information.
Should I sign a power of attorney to recover surplus funds?
Do not sign one merely because someone says it is necessary. Understand exactly what authority it grants, how long it lasts, and whether it permits someone to negotiate, endorse checks, receive money, or otherwise control your claim.
Can an Arizona Foreclosure Excess Proceeds Lawyer verify the letter?
Yes. An attorney can review the court case, ownership history, liens, claimed surplus, competing applications, and the proposed recovery agreement to help determine what the letter actually means.
Verify the Claim Before Signing Away Your Rights
Before signing an assignment, power of attorney, or percentage-fee agreement, ask Hilltop Law Firm to review the court case, confirm the amount on deposit, and identify claims that could have priority over yours.
A recorded surplus does not guarantee that the entire amount belongs to a former owner, and a real court case does not automatically make a private solicitation reliable. Taking time to verify both issues can help you make an informed decision before giving someone control over a potentially valuable claim.
Call Hilltop Law Firm at (602) 466-9631 to discuss an Arizona foreclosure excess-proceeds matter and to request a free consultation.