Detailed Answer

In Kentucky, surplus funds become available when a foreclosure sale or sheriff’s sale brings in more money than is needed to satisfy all valid liens and costs. KRS 426.520 et seq. governs how these excess proceeds reach the proper party. A former spouse or survivor may have an equitable or legal right to those funds if the underlying property belonged, in whole or part, to them.

1. Understanding Surplus Funds

When the sheriff conducts a sale under KRS 426.520, any money left over after paying mortgages, junior liens, taxes, and sale costs becomes “surplus proceeds.” The court clerk holds these funds until someone with a valid claim files to receive them.

2. Asserting a Claim After Divorce

If a final divorce decree awarded you an interest in the property or in any proceeds from its sale, you qualify as an interested party. To assert your entitlement:

1. Obtain a certified copy of the divorce decree showing your interest in the property or sale proceeds.
2. Prepare and file a “Claim for Surplus Proceeds” in the county where the sale occurred. Cite KRS 426.530.
3. Attach a copy of the decree, proof of identity, and any lien documents confirming your interest.
4. Serve notice on all parties who previously filed claims or liens, per court rules.

The court clerk will review your claim. If approved, the clerk issues a check for your share of the surplus.

3. Asserting a Claim After Death

When the property owner dies before or after a sale, the surplus funds become part of the decedent’s estate. To claim them:

1. File for probate as personal representative or administrator in the county of the decedent’s last residence.
2. Obtain Letters Testamentary or Letters of Administration.
3. File a “Claim for Surplus Proceeds” with the court clerk holding the funds. Include a certified death certificate and your letters.
4. If you are a surviving spouse or heir, attach documentation (marriage certificate, will, or heirship affidavit) demonstrating your right.

Once the court verifies your status, the clerk disburses the surplus in accordance with the probate distribution rules under KRS Chapter 394 (Intestate Succession) or the decedent’s will.

4. Key Deadlines and Procedures

KRS 426.530 sets a one-year deadline from the sale date to file a claim for surplus proceeds. Miss this deadline, and you risk losing your right to these funds. Always check the sale docket for the exact cut-off date and file well in advance.

Helpful Hints

• Review the foreclosure sale record at the county clerk’s office to confirm the surplus amount and sale date.
• Gather certified copies: divorce decree, death certificate, probate letters, and any lien or title documents.
• Consult KRS 426.520–426.540 for procedures and deadlines.
• File your claim early—courts process requests in filing-date order.
• Serve all interested parties to avoid objections or delays.
• Consider hiring a probate or real estate attorney if multiple parties dispute the surplus.
• Keep copies of all filings, service affidavits, and clerk receipts.