Trustee Sale Surplus Funds

[Dan McLaughlin]

A very unusual situation here.

2nd deed of trust trustee sale opened at $218k

At the same time the 1st deed of trust opened at $27k

No subord agreements - no other liens.

In NC we have a 10-day upset bid period that resets every time a new bid is placed.

The house is worth upwards of $650k

We are bidding on the 1st - we were just upset again. The bid is now $355k

The 2nd bid is up to $308k

After a ton of research I was able to discover the high bidders of each are the same company using different names to bid.

My question is this. Does the winner of the 2nd, who will have title to the home sub to, get to collect the entire surplus? (as it stands now that would be 355k - 27k = 328k) While the 1st will wipe out your ownership claims, that's a nice 20k profit for not doing anything!

They are using a brilliant strategy if this is the case. It is giving them a 308K bid credit that we can't match guaranteeing them the house.

I know the original owners will get the surplus from the second, but will the winners of that second collect the entire surplus from the 1st?

Anybody out there with experience in this?

Thanks

[Ellis San Jose]

In California the rule is "pro tanto" each lien holder has a order of priority and is paid up to the extent of the debt plus specified expenses. When all lien holders have been satisfied the homeowner is entitled to the excess if any.