Detailed answer — how to figure out where sale proceeds will go

When a home is sold, the cash from the sale does not simply go to whoever staged the closing. Minnesota law and normal closing practice create a clear order: the title holder and any secured or priority claimants (mortgages, tax liens, judgments) get paid first, then closing costs, and finally any remaining funds go to the person or estate legally entitled to the net proceeds. To determine exactly where the money from your father’s house sale will go, follow these steps.

1) Identify how the property is owned

Ownership determines who has legal title and who is entitled to proceeds:

• Sole ownership: if title is in your father’s name only, the proceeds generally belong to his estate if he is deceased.
• Joint tenants with right of survivorship: the surviving joint tenant(s) usually receive title automatically at death, so proceeds go to them.
• Tenancy in common: each owner has a share; a deceased owner’s share passes via will or intestacy to beneficiaries or heirs.
• Trust ownership: the trustee controls sale and distribution according to the trust.
• Transfer-on-death deed or beneficiary deed: if validly recorded, the named beneficiary takes title at the owner’s death.

How to check: obtain a copy of the recorded deed at the county recorder/registrar’s office or online county records. County deed records show the current owner and any forms of survivorship. (See Minnesota real property recording rules: Minn. Stat. ch. 507.)

2) Run a title and lien check

A title search (done by a title company or abstractor) reveals mortgages, tax liens, judgment liens, mechanic’s liens, and easements. Secured creditors are usually paid from sale proceeds in priority order. Common payoffs at closing include:

• First mortgage(s) and any subordinate mortgages.
• Property tax arrears and special assessments.
• Recorded judgment liens or IRS/state tax liens.
• Mechanic’s or construction liens (may require resolution before clear title).

Title companies prepare a preliminary payoff schedule and provide a closing (settlement) statement showing each payoff and the net proceeds.

3) If your father has died, determine whether probate or the probate-exemption process applies

If the decedent owned the house in his name alone (no survivorship, no trust, no beneficiary deed), the estate may need probate administration. In Minnesota, probate administration and distribution of an estate are governed by the Minnesota Probate Code (Minn. Stat. ch. 524). Key points:

• A personal representative (executor/administrator) gathers assets, pays debts and taxes, and distributes the remainder to beneficiaries or heirs.
• Sale proceeds often are deposited to the estate bank account. Creditors who make valid claims against the estate are paid before distributions.
• Small estates may qualify for simplified or informal procedures; otherwise the court supervises administration and distribution.

4) Know the typical payoff order at closing (illustrative example)

At closing you can expect an itemized settlement statement. A common order is:

1. Costs of sale and closing (title fees, escrow fees, broker commissions, recording fees).
2. Payoff of mortgages and home-equity lines of credit in recorded priority.
3. Payment of property taxes and municipal assessments.
4. Payment of recorded judgment liens, IRS or state tax liens (often after tax lien priority rules are applied).
5. Costs of administering an estate (if applicable): personal representative fees, attorney fees, executor commissions (as allowed by local rules or the will).
6. Remaining net proceeds to the rightful recipient — surviving joint tenant, named beneficiary, trust, or estate distribution under a will or Minnesota intestacy rules.

5) How probate changes the flow of funds

If the sale is conducted by or for a probate estate:

• The buyer’s funds typically go to an escrow or estate account controlled by the personal representative or the court.
• Creditors are given notice and can file claims against the estate. Valid claims must be paid before beneficiaries receive distributions.
• Distributions occur only after the estate’s debts, taxes, and administrative costs are resolved per Minn. Stat. ch. 524 (https://www.revisor.mn.gov/statutes/cite/524).

6) Practical documents and people to contact

To trace sale proceeds, collect the following:

• Recorded deed (county recorder).
• Title commitment or title insurance policy (from title company handling closing).
• Mortgage payoff statements (from mortgage servicer).
• Closing statement (HUD-1 or Closing Disclosure) showing exact payoffs and net distribution.
• Probate court file (if administered): petitions, orders appointing a personal representative, inventory, and accounting entries.

7) Example hypothetical

Hypothetical: Dad owned the house in his name alone and passed away. The house had a $100,000 mortgage and $2,000 in unpaid property taxes. The house sells for $200,000. At closing the title company pays off the $100,000 mortgage, the $2,000 taxes, $12,000 in broker and closing costs, and $3,000 in recorded judgment liens; those sums are deducted from the sale price. If the estate owes additional creditor claims proved in probate, the net sale funds may be held or paid to satisfy those claims. The remaining balance is transferred to the estate account and later distributed to heirs under the will or Minnesota intestacy rules.

8) When to get professional help

Complexities that warrant immediate attorney or title company involvement include:

• Conflicting title documents or unknown liens.
• Disputes among family members about who may sell the house.
• Claims by creditors, IRS, or state tax authorities.
• Potential homestead or surviving-spouse claims that could affect distribution.

For an overview of probate procedures and distribution priorities see Minnesota’s probate statutes: Minn. Stat. ch. 524.

Helpful hints

• Start with the county recorder’s office or its online portal to pull the deed and recorded liens. That tells you who holds title and what recorded encumbrances exist.
• Order a title commitment from a licensed title company early. It lists required payoffs and exceptions the purchaser must cure to obtain insurable title.
• Ask the closing/title company for an itemized closing statement (final settlement statement). This document shows exactly where every dollar went at closing.
• If the owner is deceased, check whether the sale is being handled through probate. Contact the clerk of the district court in the county where the decedent lived for the probate file or docket (public record).
• Obtain mortgage payoff letters in writing. Mortgage servicers provide exact payoffs including per‑day interest and fees for a given payoff date.
• If someone tells you proceeds went directly to a family member, verify with the closing statement or the title company before accepting that representation.
• When disputes or complex liens exist, hire a Minnesota probate or real estate attorney and ask for a written explanation of who is legally entitled to funds and why.
• Keep records: closing statements, payoff letters, recorded documents, and any probate court orders. These protect you if questions arise later.