In June 2022, ABS filed a foreclosure complaint on its second mortgage, seeking an in rem judgment and the right to proceeds from a sheriff’s sale. RCF responded, asserting its first mortgage was superior and filing its own in rem foreclosure claim. Sanders did not answer either complaint.
In March 2023, the trial court entered an order confirming RCF’s first-priority lien and ABS’s subordinate lien. The court ordered the property sold at a sheriff’s sale and set the order for distributing proceeds: first to costs, then property taxes, then RCF, then ABS (as proven by later application), then any other parties if funds remained.
The property was sold at a sheriff’s sale for $215,244.69, with Sanders’ husband as the buyer. After paying RCF’s judgment, costs, and taxes, $41,409.29 remained. RCF received its share, and the remaining funds were held by the court clerk.
ABS moved to freeze the surplus, stating it was entitled to payment as the junior mortgagee. Sanders filed her own motion, arguing that ABS’s lien was extinguished by the sale and that the surplus should go to her, especially since her bankruptcy discharge barred further claims against her.
The trial court froze the funds. ABS then filed for summary judgment, supported by an affidavit of debt, seeking the surplus to satisfy its remaining claim. Sanders opposed, arguing ABS was too late and that its lien did not attach to the proceeds. She also said ABS’s actions violated her bankruptcy discharge.