Indiana Court Rules on Attorney's Lien for Foreclosure Surplus Funds

Can a borrower's attorney claim foreclosure surplus funds through an attorney's lien in Indiana?

According to the Court of Appeals of Indiana: No, not through a foreclosure judgment. In Law Offices of Robert J. Ralis v. Daniel Nicolosi, No. 26A-MF-338 decided October 8, 2026, the court held that a law firm that had represented the borrower in other matters had no statutory lien on the surplus left after a sheriff's sale. The reason was simple: the foreclosure judgment was entered against the firm's client, not in its favor.

The facts

In November 2024, the LaPorte Superior Court entered a foreclosure judgment against North Side Ventures, LLC and others on real estate in Michigan City. The decree provided that sheriff sale proceeds should be applied first to costs, then to the mortgagee's judgment of $1,029,197 plus 15% interest, then to the clerk for those "rightfully entitled thereto."

Two months after judgment, an attorney who had performed unrelated work for North Side filed an Attorney’s Intention to Hold Lien in the approximate sum of $110,000 in unpaid fees. The property sold in August 2025 for about $1.23 million, leaving $25,373.31 in surplus. The firm claimed the surplus under its lien. Two parties filed claims for the surplus: the attorney based on his Attorney Lien, and Nicolosi, an assignee of a 2023 joint-venture agreement that allegedly entitled him to net profits from any sale of the property. The trial court awarded the surplus to Nicolosi, and the firm appealed.

What the court held

Indiana's attorney lien statute, Ind. Code § 33-43-4-1 allows a lien on "a judgment rendered in favor of a person employing the attorney to obtain the judgment." The court found that language unambiguous and applied it as written. Because the foreclosure judgment ran against North Side, there was nothing to which the attorney's lien could attach.

That ended the case. The firm's priority arguments fell away because "lien priority is irrelevant if no lien exists in the first place". The attorney argued he was entitled to an equitable lien, but the court found that argument was waived because it was raised for the first time on appeal. The court affirmed.

Why it matters for servicers

Surplus proceedings are increasingly contested, and this decision removes one category of claimant from the field in Indiana: a borrower's current or former counsel asserting a statutory lien on surplus from a judgment entered against the client. It also reinforces an order of analysis that is useful in any surplus dispute. The first question is whether a claimant holds a lien at all; priority comes only after that.

The waiver ruling is a reminder that surplus hearings are where the record gets made. Theories not presented to the trial court may not survive on appeal, for any party.

What the case does not do is expand a foreclosing lender's own claim to surplus beyond its judgment. In the ordinary case, surplus after a sale is distributed under the decree and Indiana law to those with a valid interest, and nothing in this opinion changes that.