Surplus Funds Recovery

A property going to auction is not the end of a lead, it's the start of a different deal. When a home sells at auction for more than the debt owed against it, the former owner is legally entitled to that overage, the surplus. This SOP is the recovery line: it coordinates getting that surplus back to the former owner for a fee, using an attorney to run the actual court petition. David owns this interim, alongside the attorney. As the team scales, this becomes a dedicated recovery-coordinator role, not something David runs solo forever. This SOP does not give legal advice. It coordinates a process the attorney executes and confirms against current law.

When a lead goes to auction, it moves into the surplus sequence. It does not get marked dead. A sold-at-auction lead is still a live opportunity, the former owner may be owed real money and KOD is positioned to help them get it. See sop-kod-stop-the-sale for what happens before the auction and sop-kod-ghl-sync-handoff for how a sold lead gets routed here instead of into the dead pile.

• A lead's property has just sold at auction and needs to be checked for a surplus
• A lead was previously marked Lost or dead and a review turns up an auction sale that was never checked
• The former owner has agreed to pursue recovery and needs the document stack prepared
• The attorney has filed the petition and the deal needs to be tracked through court disbursement
• A redemption-state lead needs the redemption-rights path evaluated alongside or instead of surplus

• Confirmation the property actually sold at auction, with the sale price and the payoff/loan balance at time of sale
• An attorney relationship in place who handles surplus fund petitions, ideally one already familiar with this doctrine and the state's process
• The four-document stack ready to prepare for signature: Services Agreement, Assignment of Surplus (notarized), limited power of attorney, and Letter of Direction (notarized)
• The former owner is reachable and willing to sign, this only moves forward with their signed authorization
• A way to track deal status on the Surplus Recovery board, per sop-kod-ghl-sync-handoff

• The surplus math (sale price versus loan balance) was confirmed before any conversation with the former owner about a dollar figure
• All four documents are signed, and the two that require notarization are actually notarized, before anything goes to the attorney
• The attorney, not KOD, is the one filing the court petition
• No surplus or fee funds passed through a KOD account at any point, the court disbursed both checks separately
• Every specific dollar figure, fee percentage, and state redemption window quoted to a former owner was confirmed with the attorney first, not estimated from memory
• The lead's board status reflects reality (Surplus Confirmed, Agreement Signed, Filed, Recovered) and isn't sitting stale after a milestone happened

• Problem: A lead sold at auction and got marked Lost before anyone checked for a surplus. Fix: Reopen it. Run Step 1 regardless of how long ago it closed out, a stale CRM status doesn't block a surplus check.
• Problem: The former owner is hesitant to sign because they don't understand why KOD gets a fee. Fix: Explain plainly that without help, most former owners never file for or collect a surplus at all, courts don't proactively pay it out. The fee is for doing the legal and administrative work of getting money released that would otherwise sit unclaimed. Don't oversell it, just explain it straight.
• Problem: One of the notarized documents came back unsigned or unnotarized. Fix: Do not send an incomplete stack to the attorney. Get the missing signature or notarization corrected first, an incomplete stack can stall the petition or force a re-file.
• Problem: Someone suggests routing the former owner's check through a KOD account "to make it easier" or "to speed things up." Fix: No. The court disburses directly to the former owner and separately to KOD. This is a hard control, not a convenience to shortcut. Flag it to the attorney if this is ever proposed.
• Problem: The former owner asks a direct legal question about their rights, the petition, or how much they're guaranteed to get. Fix: Don't answer it directly. Tell them the attorney will confirm the specifics for their state and situation, then actually get the attorney to follow up.
• Problem: Unsure whether a state has a redemption window, and if so how long. Fix: Confirm with the attorney for that specific state and current law. Don't rely on a number from memory or from another deal in a different state.
• Problem: The petition has been filed for well over 90 days with no update. Fix: Check in with the attorney on status rather than letting it go quiet. Some courts run slower than the typical range, but a stalled file needs a human checking on it, not just time passing.