A $1.23 million sheriff’s sale, $25,373 left over, and two parties fighting for it
An Indiana appeals court ruled a law firm cannot attach an attorney lien to foreclosure surplus from a judgment against its own client.
The Court of Appeals of Indiana held on October 8, 2026, that the Law Offices of Ralis had no valid claim to $25,373.31 in surplus proceeds from a foreclosed property in Michigan City, Indiana. The three-judge panel affirmed the trial court unanimously.
Here is how the money got there. A mortgagee held a loan on real property in Michigan City. On November 27, 2024, the LaPorte Superior Court entered a foreclosure judgment in the mortgagee’s favor against four parties, including North Side Ventures, LLC. Sale proceeds were to go first to costs and expenses, then to the mortgagee in the amount of $1,029,197 with interest at 15% per annum, and finally to the court clerk for anyone rightfully entitled.
Ralis had done legal work for North Side on matters unrelated to the foreclosure. After the judgment was already entered, on January 26, 2025, the firm filed an “Attorney’s Intention to Hold Lien,” claiming North Side owed approximately $110,000 in unpaid fees.
The property sold at sheriff’s sale in August 2025 for roughly $1.23 million. Once the mortgage, interest, and sale expenses were satisfied, $25,373.31 remained. Two parties stepped up: Ralis, citing its attorney lien, and the mortgagee, who claimed entitlement through a 2023 Joint-Venture Agreement with North Side that allegedly gave him certain net profits from the sale.
The trial court awarded the surplus to the mortgagee. Ralis appealed.
The statutory question was simple. Indiana Code section 33-43-4-1 allows a lawyer to hold a lien on “a judgment rendered in favor of a person employing the attorney to obtain the judgment.” The appeals court read that at face value. The foreclosure judgment was against North Side, not in its favor. No favorable judgment, no lien.
As the trial court had put it, Ralis was asserting “a lien on [the mortgagee’s] judgment” - not on anything recovered for its own client.
Ralis tried a second argument on appeal, claiming an equitable lien. The court rejected that too - the firm never raised the theory at trial, so it was waived.
For mortgage professionals who deal with foreclosure surplus claims, the takeaway is clean: attorney liens attach only to what a client wins, not to what a client loses.
