Quick answer

If the owner of the property died before or shortly after a foreclosure sale, the remaining sale proceeds (the “surplus” or “excess funds” after lenders and costs are paid) generally belong to the deceased owner’s estate. Whether you must open a formal probate depends on how the property was owned, how much money is involved, and whether heirs agree. In some situations a claimant can recover surplus funds without full probate (for example, via a small‑estate procedure, as a surviving joint owner, or as a trust beneficiary). For contested or large claims, a formal probate is often necessary.

How the law treats surplus funds in Hawaii

When a foreclosure sale produces more money than required to pay liens and sale costs, the leftover funds go to the lawful owner of the property at the time of the sale. If the owner died owning the property in his or her individual name, those leftover funds are an asset of the decedent’s estate.

Important ownership scenarios that change the answer:

• Joint tenancy with right of survivorship or tenancy by the entirety: the surviving joint owner typically takes full title automatically, and probate is not required to claim surplus.
• Property held in a revocable trust: the successor trustee will usually control distribution without probate.
• Property solely in the deceased’s name: surplus is estate property and will normally require probate or an available nonprobate remedy.

Common non‑probate options in Hawaii

Hawaii provides some streamlined ways to transfer small estates or to claim assets without opening a full probate. These options may let an heir or creditor obtain surplus funds with less time and cost than a full probate administration:

• Small‑estate procedures or affidavits (summary administration) when the total estate value falls under the statutory threshold. These procedures let a claimant present an affidavit and supporting documents to the holder of the funds or the court to obtain payment.
• Presenting documentation directly to the custodian of the surplus (the foreclosure trustee, clerk of court, or sheriff) such as a death certificate and proof of heirship or a certified copy of a trust instrument.
• Interpleader or court order: if the surplus custodian is unsure who should receive the funds or faces competing claims, the custodian may request a court order distributing the funds to avoid liability.

When probate is required

Open a probate estate when:

• The property (and therefore the surplus) is owned solely in the decedent’s name and no small‑estate remedy applies.
• Multiple heirs make competing claims to the surplus and the dispute cannot be resolved informally.
• The surplus amount is large enough that parties prefer the certainty and finality a court‑supervised probate provides.

Practical steps to recover surplus funds in Hawaii

1. Identify who holds the surplus. Check the foreclosure sale record or contact the foreclosure trustee or the court clerk to learn where the funds are being held.
2. Gather documents: certified death certificate, will (if any), recorded deed, recorded trust documents, marriage certificate, beneficiary designations, and any probate letters or affidavits already issued.
3. Determine ownership form: verify whether the property was held in joint tenancy, trust, or solely in the decedent’s name.
4. Ask the custodian what proof they require to release the funds. Some custodians pay on submission of a small‑estate affidavit or letters testamentary/administration; others will only pay after a court order.
5. If needed, open probate or a summary administration in the appropriate Hawaii court. The Hawaii Judiciary’s probate pages explain local forms and filing rules (see the Judiciary link below).
6. If heirs disagree or there are unclear title issues, consult an attorney before accepting or disbursing funds to avoid later liability.

Where to find Hawaii law and official guidance

Hawaii’s probate statute and related rules govern distribution of estate assets. For the official text of Hawaii’s probate code, see the Hawaii Revised Statutes, Chapter 560 (Probate Code): https://www.capitol.hawaii.gov/hrscurrent/Vol11_Ch0501-0588/HRS0560/.

Practical court procedures, probate forms, and local instructions are available from the Hawaii State Judiciary: https://www.courts.state.hi.us/. The Judiciary’s probate/self‑help pages explain small‑estate affidavits and filing steps.

When to consult an attorney

Consider hiring an attorney if any of the following apply:

• Multiple people claim the surplus or heirs disagree.
• The surplus is a substantial sum and you want certainty before accepting payment.
• Title to the property is unclear or encumbrances remain.
• There are creditors, complex estate assets, or cross‑jurisdictional issues (out‑of‑state heirs or property).

Helpful hints

• Start by contacting whoever holds the surplus (trustee, foreclosure attorney, or court clerk). They will often tell you the exact documents they need.
• If the property passed outside probate (joint ownership or trust), obtain certified copies of the deed or trust pages showing current ownership—these documents often are enough.
• Check whether the estate qualifies for Hawaii’s small‑estate process before opening full probate—this can save time and cost.
• Keep certified, original documents (death certificate, letters) ready; photocopies are usually not accepted for court or custodian releases.
• If a third party (e.g., a bank or foreclosure trustee) asks for a court order because of competing claims, do not accept or disburse funds without that order—doing so can create personal liability.
• Act promptly. Some custodians will hold funds only for a limited time before following statute or court procedures for unclaimed property.

Disclaimer

This article provides general information about Hawaii law and common procedures. It does not constitute legal advice and does not create an attorney‑client relationship. For advice about a specific situation, consult a licensed Hawaii attorney.