Which is the correct order for the disposition of proceeds after a foreclosure sale?

In a secured transactions context, when a foreclosure sale occurs, there is a specific order in which the proceeds from the sale are distributed to ensure fairness and adherence to legal standards. The correct order for the disposition of proceeds after a foreclosure sale is to first cover any creditor costs associated with the foreclosure process. This is important because those costs are necessary for maintaining the integrity of the secured agreement and ensuring that the disposition proceeds are handled properly.

After the costs are satisfied, the remaining proceeds are then applied to the secured debt owed to the creditor who conducted the sale. This ensures that the primary creditor is compensated for the debt secured by the collateral that was sold. If there are any excess proceeds after paying off the secured debt, those excess amounts are returned to the debtor or distributed to subordinate creditors, depending on their priority.

This understanding highlights the order as one that prioritizes costs associated with the foreclosure proceedings, thensettles the secured creditor's debt, and finally addresses any surplus for other parties, demonstrating a structured method of handling proceeds that aligns with the principles of secured transactions law.