Residual funds
Residual funds are the money left in a class settlement after the first round of payments, from uncashed checks, unclaimed shares or rejected claims.
Also called: leftover settlement money, unclaimed settlement funds, undistributed funds
Residual funds are the money left in a class settlement after the first round of payments, from uncashed checks, unclaimed shares or rejected claims.
What it means
Residual funds are the money still in a class action settlement after the main round of payments is done. They come from checks that were never cashed, shares nobody claimed, claims that were rejected and interest the fund earned.
The settlement agreement says what happens next, and the judge has to approve it. A federal judicial handbook lists the usual choices: pay it to class members in a second round, give it to a charity or nonprofit (a cy pres award), or return it to the company (reversion). Many courts disfavor the last option. Uncashed checks can also end up in a state's unclaimed property program, where the owner can still claim them.
The rules vary by court and by state. California, for example, has a law that sends unpaid residue from class action judgments to certain nonprofits, child advocacy programs and legal aid groups. A judge should allow time for late claims before the leftover is sent anywhere.
What it means for you
Residual funds decide where leftover money goes: to class members, to a charity or back to the company. Before you file, look in the notice for the terms "second distribution," "cy pres" and "reversion." A non-reversionary settlement cannot send leftover money back to the company.
If you were paid and money remains, you may get a second payment without doing anything, as long as the administrator has your current address. A second round often goes only to people who already claimed. If a check expires, contact the administrator or search your state's unclaimed property site.
Example
Say a settlement paid out $2 million, and $50,000 is left over after uncashed checks and rejected claims. The agreement says leftovers go out as a second payment if each person who cashed a check would receive at least $5, and otherwise go to a nonprofit. With 20,000 people paid, each would get $2.50, which is under the line. The judge approves sending the $50,000 to a consumer-protection nonprofit instead.
FAQ
The settlement says, and the judge approves. Common outcomes are a second payment to class members, a donation to a related nonprofit, or a return to the company if the deal is reversionary. Uncashed checks may also be turned over to a state unclaimed property program.
Sometimes. A judge should allow adequate time for late claims before leftover money is sent anywhere, and some administrators accept late claims before payments go out. Ask the administrator, and do not count on it.
Related terms
- Manual for Complex Litigation, Fourth, section 21.662 (Federal Judicial Center)
- Managing Class Action Litigation: A Pocket Guide for Judges, 3d ed. (Federal Judicial Center, 2010)
- NAUPA, What is unclaimed property?
- California Code of Civil Procedure § 384, unpaid residue in class actions (FindLaw)
Updated Oct 18, 2026. Plain-English definitions for general information — not legal or tax advice.