Who Can Claim Surplus Proceeds for a Trustee Sale on Property Solely in a Deceased Spouse’s Name?
Detailed Answer
Under Arizona law, when a nonjudicial trustee sale generates surplus proceeds after paying the secured debt and sale expenses, any excess must go to the persons legally entitled. If the foreclosed property was titled solely in a spouse who has since died, the decedent’s interest passes either through community property rules or via probate.
- Trustee Distribution Duties
The trustee must distribute surplus funds to entitled parties. See ARS §33-811 for requirements on surplus payment. - Deposit of Unclaimed Funds
If the trustee cannot immediately locate the entitled party, or upon court order, the surplus is deposited with the county treasurer or court clerk. See ARS §33-814 for custody and release procedures. - Surviving Spouse’s Community Property Rights
Arizona is a community property state. If the property was community property, the surviving spouse automatically owns the decedent’s one-half interest by operation of law. See ARS §25-211. That half does not enter probate and the surplus attributable to it goes directly to the surviving spouse. - Probate of Decedent’s Separate Interest
The decedent’s separate property interest becomes part of the probate estate. If there is a valid will, distribution follows its terms. If intestate, Arizona’s intestacy rules apply. Under ARS §14-2102, a surviving spouse often receives the entire intestate share when there are no competing heirs, or a substantial portion if there are descendants from another relationship. - Claiming the Surplus
To recover surplus proceeds, a claimant must file a written application with the county treasurer or court clerk, attach proof of entitlement (death certificate, letters testamentary or of administration) and, if required, a court order confirming the right to distribution.
In most cases, the surviving spouse qualifies to receive surplus proceeds either through community property rights or under probate distribution rules. Competing claims (for example, creditors or other heirs) may require a court order to resolve.
Helpful Hints
- Confirm whether the property was community or separate before filing a claim.
- Collect essential documents: certified death certificate, probate letters, trust deed documents.
- Contact the county treasurer or court clerk’s office to learn their claim-filing process and deadlines.
- Be prepared to obtain a court order if multiple parties claim the surplus.
- Consider consulting a probate or real estate attorney to help navigate complex disputes.