How Can a Former Spouse or Survivor Assert Entitlement to Surplus Funds Following the Owner’s Death or Divorce?
Detailed Answer
1. Understanding Surplus Funds After a Judicial Sale
When a property owner faces a judicial sale—such as a mortgage foreclosure—any proceeds above the outstanding debt, interest, and sale costs become “surplus funds.” The circuit court clerk or sheriff holds these funds until a valid claimant appears.
2. Identifying Your Claim as a Former Spouse
During divorce proceedings, the court divides marital assets and debts. If your final divorce decree or settlement awarded you a share of equity in the property, you likely have an interest in any surplus funds. Under Ala. Code §30-2-51, the court may assign property or its proceeds to either party upon divorce.
3. Establishing Rights as a Survivor
If the property owner died before the judicial sale, the surplus becomes part of the decedent’s estate. An heir or beneficiary must claim these assets through probate. You must secure letters testamentary or administration under Ala. Code §43-8-301 to act on behalf of the estate.
4. Locating and Claiming the Funds
- Determine the sale county. Contact the circuit court clerk or sheriff who handled the sale.
- Gather proof of your interest:
- Divorce decree and settlement agreement (for former spouses).
- Death certificate, will, and letters testamentary or administration (for survivors).
- File a written claim or petition—often entitled “Application for Disbursement of Surplus Funds”—at the clerk’s office.
- Serve notice on interested parties if local court rules require it.
- Ask the court for an order awarding the surplus to you. The court follows procedures in Ala. Code §6-6-155.
- Once the order issues, collect the funds. The clerk will issue a check in your name or the estate’s name.
5. Time Limits and Escheat
Alabama law generally requires claimants to seek surplus funds within one year of the sale date. If no valid claim arises, the funds may escheat to the county under Ala. Code §35-12-188.
Helpful Hints
- Review your divorce judgment for explicit language about property proceeds.
- Obtain certified copies of all relevant court orders, death certificates, and probate documents.
- Contact the clerk’s office early to confirm local filing forms and fees.
- Consider consulting a probate attorney to open or reopen an estate if needed.
- Monitor foreclosure notices and court dockets to track sale dates and deadlines.