Surplus Funds After a Michigan Sheriff Sale: How to Find and Claim Your Leftover Equity
If your Michigan home went to a sheriff sale, or the sale date is on the calendar, it is natural to assume the story ends there. It doesn't always. When a home sells at auction for more than the mortgage and the foreclosure costs, the difference is called surplus funds, and under Michigan law that money belongs to the former homeowner unless someone with a lien on the property claims it first.
Plenty of families never collect it, usually because nobody told them it existed. This guide explains what foreclosure surplus funds are, how to find out whether your sale produced any, how the Michigan claim process works, and why protecting your equity before the auction usually beats chasing it afterward. For the full picture of the auction and the redemption period, start with our pillar guide to sheriff sales and redemption in Michigan.
What are surplus funds after a sheriff sale?
Most Michigan home foreclosures are handled "by advertisement," which ends with a public auction run by the county sheriff or a deputy. The winning bid pays off what is owed. If there is money left over, it is surplus.
The rule comes from MCL 600.3252. After the sale, any money left in the hands of the officer who made the sale, once the mortgage and the costs and expenses of the foreclosure and sale are satisfied, is to be paid on demand to the mortgagor, or to their legal representatives or assigns. In plain English: the leftover money is yours to request.
A simple example shows how it works:
| Item | Amount |
|---|---|
| Winning bid at the sheriff sale | $190,000 |
| Mortgage balance, interest, and fees | −$140,000 |
| Foreclosure and sale costs | −$3,000 |
| Surplus funds | $47,000 |
That is real money: a security deposit, a moving truck, and a fresh start with savings set aside.
Why many sheriff sales produce no surplus at all
Here is the honest part. The lender is allowed to credit bid at the auction, meaning it can bid up to the amount it is owed without putting up cash. In many sales, the lender's opening bid is at or near the debt and no outside bidder tops it. When the lender wins with a bid equal to the debt, there is nothing left over.
Surplus usually appears when an outside bidder, often an investor paying with certified funds, bids above the debt. Even then, auction prices tend to land well below what the same house would bring on the open market, because buyers at a sheriff sale can't go inside, can't get a normal inspection, and have to wait out the redemption period before they own the home.
So if your home has solid equity, a surplus check is possible, but it is often a fraction of what that equity is really worth.
How to find out whether your sale produced surplus funds
You don't need to hire anyone to answer this question. Three steps usually get you there:
- Find the winning bid. After the auction, a sheriff's deed is recorded with the county Register of Deeds. It shows who bought the property and the amount of the bid. Most counties let you search recorded documents online or request a copy in person.
- Find the total that was owed. Your servicer or the foreclosing law firm can tell you the amount due on the sale date, including fees and costs. Ask for it in writing. Your last mortgage statement or a payoff statement is a good starting point.
- Compare the two, and ask the sheriff's office. If the bid is higher than the total owed, contact the sheriff's office in the county where the sale was held and ask whether surplus funds are being held for that sale. In Wayne County, the Sheriff's Court Services office (313-224-2260) is the listed contact for surplus questions; confirm current procedures when you call.
If the numbers are close, don't give up on the math. Small differences in fees and costs can decide whether there is a few thousand dollars waiting for you.
How to claim surplus funds in Michigan
The process depends on one question: did anyone else with a lien on the house file a claim?
- No competing claims. MCL 600.3252 says the surplus is paid over on demand to the mortgagor. In practice, that means contacting the office that conducted the sale, confirming your identity and ownership, and following its written request process. Keep copies of everything you send.
- A junior lienholder files a claim. A second mortgage lender, home equity line, or other lienholder can file a written claim, verified under oath, stating the amount it is owed. The statute then requires the officer to pay the surplus to the clerk of the circuit court and file the claim there. Anyone with an interest in the money can ask the court to take proofs, and a judge decides who gets paid and how much.
Michigan courts have confirmed that valid junior liens get paid from the surplus ahead of the former owner. In In re $55,336.17 Surplus Funds (2017), the Court of Appeals upheld an order paying a junior mortgagee from surplus money. If a second mortgage or other lien is recorded against your house, expect it to come out of the surplus first, and plan for any balance left after that.
If the claim ends up in circuit court, this is a good moment to talk with a Michigan attorney or a free legal aid program. Michigan Legal Help and HUD-approved housing counselors (800-569-4287) can point you to low-cost or free help.
Watch out for surplus "recovery" companies
Once a sale produces a surplus, letters and calls often follow from companies offering to recover the money for you. Many work on contingency and keep a share of what they collect, commonly 10% to 30% or more. Before you sign anything:
- Remember that you can request mortgage-sale surplus yourself from the office that ran the sale.
- Never pay an upfront fee to "unlock" money that is already legally yours.
- Read any assignment carefully. Signing over your rights to the surplus can mean giving up a large slice of your equity.
Also note that the tax foreclosure process is completely different, with its own forms and deadlines. If your home was lost over unpaid property taxes, read our guide to claiming surplus proceeds after a Michigan tax foreclosure sale instead.
The better move: protect your equity before the auction
Surplus funds are a safety net, not a strategy. Because auction prices usually trail market value, a homeowner with real equity almost always keeps more by acting before the sheriff sale, or during the redemption period, than by waiting for whatever is left over.
Compare the example above. The same house might sell for $260,000 on the open market. Even after typical selling costs of 6% to 10%, the family could walk away with far more than the $47,000 auction surplus. Our breakdown of net proceeds when you sell before foreclosure in Michigan walks through that math step by step, and our guide to what happens after a sheriff sale in Michigan explains the options that stay open once the auction is over.
If you have meaningful equity and a foreclosure date is approaching, it is worth a quick look at whether your home qualifies for equity-based funding from All In Bridge Loans to cover the arrears and buy time to sell on your own terms.
Whatever stage you are at, the takeaway is hopeful: your equity doesn't simply vanish at the auction. Know your numbers, ask the sheriff's office directly, and keep as much of what you have built as possible.
Have equity in your Michigan home and a sheriff sale on the calendar? See how that equity could keep more money in your family's hands.
See if your home qualifies ->All In Horizon provides asset-based bridge financing. Loan availability, terms, and timing depend on the property, equity position, and exit plan, and are subject to underwriting. This article is educational and is not financial, legal, or tax advice. Nothing here is a substitute for guidance from a licensed attorney.