15-1512.Application of Proceeds of Sale and Surplus.
Article XV. Mortgage Foreclosure · Part 15. Judicial Foreclosure Procedure · Not amended since adoption on record · Last verified July 20, 2026
In one sentenceSection 15-1512 sets the payout order for foreclosure sale proceeds -- sale expenses first, then costs of securing, maintaining, and preparing the property, then claims in the priority the judgment or confirmation order set, then any surplus held for court-ordered distribution or forfeited to the State if unclaimed.
The proceeds resulting from a sale of real estate under this Article shall be applied in the following order: (a) the reasonable expenses of sale; (b) the reasonable expenses of securing possession before
sale, holding, maintaining, and preparing the real estate for sale, including payment of taxes and other governmental charges, premiums on hazard and liability insurance, receiver's and management fees, and, to the extent provided for in the mortgage or other recorded agreement and not prohibited by law, reasonable attorneys' fees, payments made pursuant to Section 15-1505 and other legal expenses incurred by the mortgagee;
(c)if the sale was pursuant to judicial foreclosure, satisfaction of claims in the order of priority adjudicated in the judgment of foreclosure or order confirming the sale; and
(d)remittance of any surplus to be held by the person appointed by the court to conduct the sale until further order of the court. If there is a surplus, such person conducting the sale shall send written notice to all parties to the proceeding advising them of the amount of the surplus, and that the surplus shall be held until a party obtains a court order for its distribution or until, in the absence of an order, the surplus is forfeited to the State.
Plain-English Summary
When a foreclosure sale generates proceeds, Section 15-1512 fixes the order in which they get paid out. First come the reasonable expenses of the sale itself. Second come the reasonable expenses of securing possession before sale and of holding, maintaining, and preparing the property for sale -- taxes and other government charges, hazard and liability insurance premiums, receiver's and management fees, and, to the extent the mortgage or another recorded agreement allows and law doesn't forbid, reasonable attorney's fees, payments made under Section 15-1505, and other legal expenses the mortgagee incurred.
Third, if the sale followed a judicial foreclosure, claims are satisfied in the priority order the judgment of foreclosure or the order confirming the sale adjudicated. Whatever is left after that becomes the fourth category: a surplus, held by the person the court appointed to conduct the sale until the court orders otherwise.
The statute also tells the sale conductor what to do with a surplus: send written notice to all parties advising them of its amount, and hold it until a party gets a court order for its distribution -- or, absent such an order, until the surplus is forfeited to the State.
Frequently Asked Questions
What gets paid first from foreclosure sale proceeds?
The reasonable expenses of the sale itself.
Where do attorney's fees fit in the payout order for sale proceeds?
They fall within the second category -- expenses of securing, holding, maintaining, and preparing the property for sale -- to the extent the mortgage or a recorded agreement allows and the law doesn't prohibit.
How is a surplus after a foreclosure sale handled?
The person who conducted the sale holds it, sends written notice to all parties of its amount, and keeps it until a party obtains a court order for distribution.
What happens to an unclaimed surplus?
Absent a court order for distribution, the surplus is forfeited to the State.
In what order are competing claims to the proceeds satisfied?
In the order of priority adjudicated in the judgment of foreclosure or the order confirming the sale, if the sale followed a judicial foreclosure.
Amendment History
(Source: P.A. 86-974.)
Source & verification. Section text and amendment history are
reproduced verbatim from the Illinois Compiled Statutes, published by the
Illinois Compiled Statutes, Illinois General Assembly / Legislative Reference Bureau. Last verified July 20, 2026.
· Official source
Also known as:illinois foreclosure sale proceeds distribution ordersurplus funds foreclosure illinoisforeclosure sale expenses priority illinoisunclaimed foreclosure surplus illinois