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 in Iowa

Surplus funds arise when a judicial or sheriff sale of real estate or personal property brings in more money than the debt, fees, and costs owed. Under Iowa Code § 626.20, the sheriff must deposit any surplus with the clerk of the district court. Similarly, in a foreclosure by advertisement, any excess proceeds go into the clerk’s hands per Iowa Code § 627.11. These funds do not automatically reach heirs, former spouses, or beneficiaries—they remain with the court until a valid claimant steps forward.

2. Claiming Surplus Funds After the Owner’s Death

When the property owner dies, surplus sale proceeds become part of the probate estate. To recover them:

• File a claim in the decedent’s probate case. Iowa Code § 633.36 sets a general deadline for submitting claims against an estate. Late claims may be disallowed.
• If the estate qualifies as a “small estate” (assets under $100,000), use the small-estate affidavit process under Iowa Code Chapter 635. This streamlined procedure often avoids formal probate and allows heirs or surviving spouses to collect assets directly.
• Provide required documents: certified copy of the death certificate, letters testamentary or of administration (if appointed), your identification, and any proof of relationship (marriage certificate or heirship affidavit).
• Serve notice on interested parties and file your affidavit or claim with the clerk of the district court in the county where the sale occurred.

3. Claiming Surplus Funds After Divorce

A divorce decree may award one former spouse an interest in the family home or equity after sale. To enforce that award:

• Obtain a certified copy of your divorce decree or judgment specifying your share of proceeds.
• Confirm that any lien or judgment resulting from your decree is recorded in the county where the property was sold.
• File an application with the clerk of the district court under Iowa Code § 626.20 for distribution of surplus funds. Include your decree, proof of recording, and a sworn affidavit describing your entitlement.
• Serve notice on any other entitled parties. The clerk reviews claims and issues an order directing the sheriff or treasurer to pay out the surplus.
• Act promptly. Under Iowa Code Chapter 555B, unclaimed property escheats to the State Treasurer after five years.

4. Key Iowa Code References

• Iowa Code § 626.20 (distribution of surplus funds after execution sale)
• Iowa Code § 627.11 (surplus funds after foreclosure by advertisement)
• Iowa Code § 633.36 (claims against an estate)
• Iowa Code Chapter 635 (small-estate affidavit)
• Iowa Code § 555B.11 (escheat of unclaimed property)

Helpful Hints

• Gather all court orders, death certificates, and recording documents before filing.
• Visit the clerk of court’s office to learn local filing procedures and fees.
• Prepare a detailed affidavit outlining dates of sale, amount of surplus, and your legal basis to claim.
• Consider the small-estate affidavit if the surplus falls under the statutory limit.
• Monitor any deadlines for claims against an estate or unclaimed property escheat.
• Keep certified copies of everything you submit and proof of service to other parties.
• If you encounter resistance, consider consulting an attorney experienced in Iowa foreclosure and probate matters.