Surplus funds laws · 2026
California Surplus Funds Laws: What Changed in 2026
January 20, 2026
Understanding California surplus funds laws is essential if you want to claim excess proceeds after a foreclosure or tax sale. This article summarizes the key legal framework in 2026 and what you need to know to claim surplus funds in California.
California Civil Code and surplus funds
In California, surplus funds from trustee sales (non-judicial foreclosures) are governed mainly by the Civil Code. Under California Civil Code §§ 2924j and 2924k, when a property is sold at a trustee sale and the sale price exceeds the amount required to satisfy the debt, costs, and fees, the trustee must account for the excess and disburse it according to statute. Eligible parties—typically the former owner or junior lienholders—may file a claim with the trustee or, in some cases, with the county once funds are transferred.
In 2026, the core rules remain: the trustee (or county) holds the surplus until valid claims are processed, and claimants must meet eligibility requirements and file on time. Legislative updates, if any, may affect notice periods or procedural details; county offices and trustees can provide the latest forms and deadlines.
Trustee sale vs. tax sale: two different paths
Trustee sale (non-judicial foreclosure): This is the most common type of foreclosure in California. The lender (or beneficiary) instructs the trustee to sell the property. Surplus is held by the trustee; in some situations funds are transferred to the county. Claimants must file with the correct holder and within the required time.
Tax sale: When property is sold for unpaid property taxes, excess proceeds are handled under the Revenue and Taxation Code. The county tax collector or treasurer holds the funds. Former owners and other entitled parties may claim excess proceeds by following the county's process and deadlines.
Who can claim under California surplus funds laws?
Eligibility depends on the type of sale:
- Former owner. The person who held title when the property was sold is usually first in line for surplus from a trustee sale.
- Heirs. If the owner is deceased, heirs may claim with proper documentation (e.g., death certificate, probate or small-estate affidavit).
- Junior lienholders. Parties with a recorded lien that was subordinate to the foreclosing lien may have a claim in some cases.
For tax sales, the Revenue and Taxation Code defines who may claim excess proceeds; counties implement the process. We review your situation and advise whether you may qualify.
Deadlines and why they matter
California law and county rules set strict deadlines for filing a claim. Missing the deadline usually means you lose your right to the funds. Deadlines vary by county and type of sale. In 2026, as in prior years, the key is to determine the correct deadline and file a complete, correct claim before it passes. We file on time and follow up so your claim is processed.
What to do in 2026
If you had a foreclosure or tax sale in California, start by checking whether surplus or excess proceeds may be available. Use a free search to confirm. Then file the correct forms with the correct office before the deadline. If you prefer not to handle the paperwork yourself, a professional service can do it for a percentage of the recovery—for example, we charge 25% only when we recover funds for you.