Detailed Answer

This article explains how surplus funds from the sale of real property (for example, after a foreclosure or trustee sale) are handled in California and whether you must open a probate estate to recover those funds. The answer depends on two main facts: (1) whether the former owner is alive or deceased, and (2) the amount of the surplus relative to California’s small‑estate procedures.

If the former owner is alive

If the person whose property generated the surplus is still living, you generally do not need to open probate. The trustee or the party that conducted the sale holds the surplus as personal property and must pay it to the person entitled to it (usually the former owner, or a junior lienholder if they have a superior claim). California’s nonjudicial foreclosure statutes require the trustee to account for and handle surplus funds after a trustee’s sale. See California Civil Code section 2924k for the trustee’s duties after sale.

Typical steps to recover a surplus when the owner is alive:

• Contact the trustee or the entity that held the sale. Provide identification and proof of entitlement (deed, payoff statements, lien releases, etc.).
• If the trustee refuses or fails to respond, you may file a claim in court or a civil action to compel payment.

If the former owner is deceased

If the owner died before you recovered the surplus, the surplus is an asset of the decedent’s estate. Whether you must open a full probate proceeding depends on the size of the estate and who is trying to collect.

Key options:

• Small‑estate collection: California provides an affidavit process for collecting personal property of a decedent without formal probate if the decedent’s estate subject to administration is small. That procedure is in the California Probate Code (see the chapter beginning at Prob. Code §13100 et seq.). If the total estate (including the surplus) falls under the statutory limit, an heir or successor can use the small‑estate affidavit to collect the surplus from the holder.
• Representative collection under letters: If someone has been appointed executor or administrator (letters testamentary or letters of administration) through probate, that representative can collect the surplus in the name of the estate by presenting the letters to the county treasurer, trustee, or holder of funds.
• Full probate petition when required: If the estate exceeds the small‑estate thresholds or if multiple parties dispute entitlement, you may need to open a formal probate case so the court can resolve claims and direct distribution. A court order or letters are often required before banks, county treasurers, or trustees will release funds when the owner is deceased.

Common practical scenarios (hypotheticals)

Hypothetical A — Living former owner: Jane sold through a trustee’s sale and there was a $12,000 surplus. Jane provides ID and a copy of the deed and gets paid by the trustee without probate.

Hypothetical B — Deceased former owner, small estate: John died leaving a $20,000 surplus from a sale and no other assets. His surviving child signs a small‑estate affidavit under the Probate Code process and collects the surplus without formal probate.

Hypothetical C — Deceased owner, contested or large estate: Mary died leaving a $200,000 surplus and multiple heirs each asserting rights. The county or trustee will likely require letters from a probate court or a court order distributing the funds, so someone must open probate or obtain court approval.

Who can legally claim the surplus?

Common claimants include the prior owner, surviving spouse or heirs (if owner deceased), junior lienholders, and sometimes the holder of a judgment that attaches to the surplus. Priority of claims follows normal property and lien priorities.

Practical steps to try first

1. Identify and contact the holder of the surplus (trustee, county treasurer, or sale agent). Ask for the claimant procedures and required documents.
2. Gather documents that show your entitlement: deed, death certificate (if applicable), recorded assignments or releases of liens, IDs, and any court letters if probate is open.
3. If the decedent died and the estate is small, review the small‑estate affidavit rules in the California Probate Code (Prob. Code §13100 et seq.).
4. If you encounter resistance or competing claims, consider filing a probate petition or an interpleader/quiet title or civil action to resolve entitlement.

Where to find the law

Relevant California statutes and resources:

• Trustee sale duties and surplus procedures: California Civil Code §2924k — https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=2924k&lawCode=CIV
• Small‑estate affidavit and related collection procedures: California Probate Code §13100 et seq. — https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=13100&lawCode=PRC
• California Courts self‑help pages on probate and small estates: https://www.courts.ca.gov/selfhelp.htm

When you should consider hiring an attorney

Get legal help if:

• The estate exceeds the small‑estate limits or you are unsure about eligibility for the affidavit process;
• Multiple parties dispute entitlement to the surplus;
• The holder refuses to release funds despite apparent entitlement; or
• The facts involve complex liens, judgments, or possible fraud.

Helpful Hints

• Act promptly. Holders of sale proceeds may have internal deadlines for claims.
• Collect and preserve original documents: recorded deeds, trustee sale statements, and lien release records.
• If the owner is deceased, obtain a certified copy of the death certificate early; many institutions require it.
• Before filing probate, ask the holder whether they will accept a small‑estate affidavit; it can save time and cost.
• Keep records of all communications (dates, names, and copies of letters/emails). These help if you must go to court.
• Verify current small‑estate thresholds before relying on them; statutory limits can change. Check the California Probate Code or court self‑help resources.

Disclaimer: This information is educational only and is not legal advice. It does not create an attorney–client relationship. For advice about your specific situation, consult a licensed California attorney.