How Do Surplus Funds Agents Get Paid?

Quick answer: Surplus funds agents often work for a percentage of the money recovered. The family usually pays nothing up front. The agent gets paid when the money is released. But state rules can limit fees, set waiting periods, or control how agents contact families. Rules may differ for mortgage foreclosures and tax sales.

• A common payment method is a contingency fee. No recovery means no fee.
• A fee agreement lets the family keep the claim. An assignment transfers the claim to the agent for payment.
• State law may set a fee limit or other conditions.
• Mortgage foreclosure rules and tax sale rules can differ in the same state.
• Check the rules, explain the fee in writing, and tell families they may claim the money themselves.

Often, an agent gets a percentage of the money recovered. The family pays nothing up front. The agent is paid after the money is released.

This is called a contingency fee. You find the money, help the family file a claim, and wait for the claim to be paid. If there is no recovery, there is no fee.

That timing matters. Signing an agreement does not mean you get paid that day. A court or county may take a few weeks or a few months to release the money. Sometimes an attorney must be involved, so plan for that possible cost from the start.

A contingency arrangement can make it easier for a family to work with an agent. The family does not pay a fee before the claim succeeds. The agent gets paid when the family gets paid.

A fee agreement lets the family keep the claim and pay the agent a percentage after recovery. An assignment transfers the family's right to the money to the agent, who pays the family for that right.

An assignment can sound simple, but it may take real money and patience. In Texas tax sale cases, for example, the buyer must pay the owner at least 80 percent of the claim on the date of the assignment. That means paying before the court releases the funds. See Texas Tax Code 34.04.

For many people starting out, a fee agreement is the more direct place to begin. Either way, check the rules before naming a fee or signing an agreement.

State laws may cap the fee, set a waiting period, or limit how an agent can contact a family. The rules vary, so check the law for the state and sale type involved.

Some states limit fees by percentage. Others use a dollar limit. For example, Arizona law says a fee above $2,500 for certain trustee sale excess proceeds is presumed unreasonable, and a court will not enforce an unreasonable fee. Attorney fees and filing costs are excluded from that amount. A person may ask the court to approve a higher fee and must show that it is fair. Read the Arizona law.

Some states limit who can charge a fee at all. In Texas tax sale cases, a person who is not an attorney may not charge a fee to obtain excess proceeds for an owner. Attorney fees there are capped at 25 percent or $1,000, whichever is less. See Texas Tax Code 34.04.

Some states also require a waiting period after a sale. Other rules may control how an agent contacts an owner. Those details can affect when you may sign an agreement and which ways of reaching a family are allowed.

A state with no written fee cap does not mean every fee will be accepted. A judge may decide whether the fee was fair after the work is done. In some states, a court must honor an agreement that follows the law. Florida law, for example, says the court shall honor a qualifying assignment that meets its requirements. Read Florida's law on mortgage foreclosure surplus assignments.

Yes. The rules for mortgage foreclosure surplus and tax sale surplus can differ, even within the same state.

Florida is one example. Its law sets requirements for certain mortgage foreclosure surplus assignments. Florida's tax deed surplus law does not set a fee rule for recovery agents. Check each sale type separately, rather than assuming one rule covers both. See Florida's mortgage foreclosure law and its tax deed surplus law.

The amount of the surplus does not tell you what fee is allowed. A fee rule might apply whether the surplus is $20,000 or $200,000. Start with the state and the kind of sale. Then check any limit, waiting period, and contact rules.

In most states, an owner can claim surplus funds without hiring an agent. Some states require agents to tell the owner this in writing. Be honest about that option.

Many families do not know the money exists. Others are unsure where it is, who holds it, or which forms to file. A claim can also feel like a lot to handle after losing a home.

I've seen how personal this work can be. Some families have just lost a home. Some have lost a parent, too. They may not have the energy to deal with a court process right away.

Your role is to explain what you can do and what the family can do on their own. Some people will be skeptical. Some may not be pleasant, even when you bring good news. Be patient and be straight with them.

• Surplus funds: Money left after a property sale pays the amounts owed and other people in line.
• Excess proceeds: Another term for money left after a foreclosure or tax sale.
• Overages: A common name for surplus money from a property sale.
• Contingency fee: A fee paid if the claim succeeds, often as a percentage of the recovered amount.
• Assignment: An agreement that transfers a claim to another person in exchange for payment.
• Fee agreement: A written agreement that explains the agent's work and fee while the family keeps the claim.

I've been doing surplus funds recovery since 2013, with more than 2,000 cases and over $100 million recovered for foreclosure victims. If you want to learn more, join my free live masterclass every Thursday. We cover how we find families, how we file claims, and how you can earn by helping them. No pressure. Save your spot for the masterclass.

This post is education, not legal advice. Rules change and vary by state and county. Check your state's current law or talk to a licensed attorney before you act.