Detailed Answer
Understanding Surplus Funds After Sale
When a California property owner faces a court-ordered sale—whether by foreclosure, partition or probate—the sale may generate surplus funds. Surplus funds occur when the sale price exceeds the debts, fees and costs secured by the property. Former spouses and survivors can assert rights to those proceeds under state statutes and court orders.
Step 1: Identify the Sale Type and Your Interest
First, determine how the sale occurred. Common scenarios include:
- Foreclosure sale under Code of Civil Procedure (CCP) §726.
- Probate sale under Probate Code §10100.
- Partition sale under CCP §873.710 et seq.
- Family-law property division enforced by Family Code §2122.
Next, verify your interest:
- Former spouse: Show your final judgment of dissolution awarding community or separate property interest.
- Survivor or heir: Present a death certificate and letters testamentary or letters of administration.
Step 2: Meet Deadlines and File a Claim
Under CCP §726, the clerk must mail a Notice of Application for Distribution of Surplus Funds to the judgment debtor, purchaser and occupants. You have six months from the sale date to submit your claim. To preserve your rights:
- Prepare an Application and Proof of Claim for Surplus Funds. Provide your name, address, facts supporting your interest and copies of relevant documents (divorce decree, death certificate, probate letters).
- File your claim with the court clerk in the county where the sale occurred. Pay any filing fees or request a fee waiver if eligible.
- Serve copies on all parties listed in the notice. Follow CCP §726(b)(2) service rules.
If you miss the six-month deadline, the court may transfer surplus funds to the county treasury under CCP §726(c). You can still petition the court for relief from default under CCP §473, but success is not guaranteed.
Step 3: Pursue Probate or Family-Law Distribution
For probate sales, surplus funds become part of the decedent’s estate. File a petition for final distribution under Probate Code §10100. Support your petition with documents proving heirship or beneficiary status. The court will confirm distribution to survivors.
For family-law sales, enforce the property division order. File a motion to enforce under Family Code §2122. Attach your dissolution judgment and proof of surplus.
Key Statutory References
- CCP §726 – Distribution of surplus funds after sale.
- CCP §719.090 – Definition of surplus proceeds.
- Probate Code §10100 – Petition for distribution of proceeds.
- Family Code §2122 – Enforcement of property division orders.
Helpful Hints
- Act quickly: File your claim within six months of the sale date to avoid forfeiture.
- Gather proof: Divorce decrees, death certificates and probate letters strengthen your application.
- Check fees: Request a fee waiver if you qualify to reduce costs.
- Serve properly: Follow CCP §726 service rules to prevent delays.
- Consult counsel: An attorney can advise on complex disputes or help with court petitions.