Understanding Where Sale Proceeds from a Deceased Person’s House Will Go

When someone dies and their house is sold, the sale money does not automatically go to a single person. The destination of the proceeds depends on who owned the property, what liens or mortgages exist, whether there is a will, and whether the estate must go through probate. This FAQ-style guide explains, step by step, how to find out exactly where the proceeds will go under Maryland law and what actions you can take to get clear answers.

Detailed Answer: Step-by-step process to determine where sale proceeds will go (Maryland)

1. Step 1 — Confirm how the property was titled at the time of death.

   Look up the deed to see the name(s) on title and the type of ownership. Common possibilities: sole ownership, joint tenancy with right of survivorship, tenancy by the entirety (for married couples), or a recorded beneficiary/transfer-on-death instrument. If the property had a survivorship owner or a valid transfer-on-death instrument, the property may pass outside of probate and the proceeds will go to the surviving owner or beneficiary named on the deed.

   Where to check: Maryland Department of Assessments and Taxation (Real Property Search): https://sdat.dat.maryland.gov/RealProperty/Pages/default.aspx.

2. Step 2 — Identify secured debts and recorded liens.

   Mortgages and recorded liens attach to the property. When the property is sold, those secured claims are paid from the sale proceeds in order of lien priority (generally oldest recorded liens first). Check for mortgage balances, tax liens, mechanic’s liens, IRS liens, and court judgments.

   Where to check: county land records via SDAT and Maryland Courts Case Search for judgments: https://casesearch.courts.state.md.us/casesearch/.

3. Step 3 — Determine whether the property is part of a probate estate.

   If the decedent owned the house solely in their name and no effective beneficiary or survivorship owner exists, the property typically becomes part of the decedent’s probate estate. The executor or personal representative has authority (subject to court supervision if required) to sell estate property and apply proceeds to pay debts and expenses before distributing to heirs.

   Maryland probate information and how to open an estate: https://www.mdcourts.gov/probate.

4. Step 4 — Know the usual order of payments from sale proceeds.

   When a house owned by the estate sells, the typical priority is:

   • Pay off any liens and secured mortgages against the property at or before closing.
   • Pay closing costs tied to the sale (real estate agent commissions, title fees, prorated taxes and utilities).
   • Pay expenses of estate administration: funeral costs (if charged to the estate), probate costs, filing fees, and reasonable attorney/accountant fees.
   • Pay taxes owed by the estate (federal estate tax, Maryland estate tax if applicable, unpaid property tax). See Maryland Comptroller on estate tax: https://www.marylandtaxes.gov/business/taxes/estate-tax.php.
   • Pay approved unsecured creditor claims presented to the estate.
   • Distribute any remaining net proceeds to beneficiaries under the will, or to heirs under Maryland intestacy rules if there is no valid will.

   Note: Some family protections (homestead allowance, family allowance) may take priority. For specific local rules and forms, use the Maryland Courts probate pages: https://www.mdcourts.gov/probate.

5. Step 5 — If you are an heir or potential beneficiary, ask for an accounting or records.

   The personal representative (executor or administrator) owes the estate a duty to account for sales, receipts, and disbursements. You can request a written accounting. If the personal representative refuses or you suspect misallocation, you may petition the probate court for an accounting or other relief.

6. Step 6 — Small-estate or abbreviated procedures when values are low.

   Maryland provides simplified procedures for small estates or for certain transfers of property without full probate. If the house value (or net estate) is below the statutory threshold, a simpler transfer may be available. See the Maryland Courts probate resources for small-estate procedures.

7. Step 7 — When to get help from a probate or real estate attorney.

   If the ownership is unclear, liens exist, creditors contest distributions, or you need to force an accounting, an attorney who handles Maryland probate and real estate can advise you and, if necessary, file petitions in the Register of Wills or Orphans’ Court.

Short hypothetical example (to illustrate how proceeds are divided)

Hypothetical facts: Dad died owning a house in his sole name. Mortgage balance = $150,000. No recorded surviving co-owner or beneficiary. Estate sells the home for $300,000. Closing costs and commissions total $24,000. Estate administration costs (probate fees, attorney) = $6,000. Valid unsecured claims presented and allowed total $10,000.

Quick math:

• Sale price: $300,000
• Less mortgages/liens paid at closing: $150,000
• Less closing costs/commissions: $24,000
• Net remaining: $126,000
• Less administration costs and approved unsecured claims: $16,000
• Net distributable to beneficiaries: $110,000 (distributed per will or intestacy)

This example shows secured debts and sale costs come off the top; unsecured creditors and estate expenses follow; beneficiaries receive the remainder.

How you can quickly find out the specifics in your case

1. Get a copy of the recorded deed from SDAT to see how title stood at death: SDAT Real Property.
2. Search for recorded mortgages and liens in county land records and for judgments at Maryland Courts Case Search.
3. Ask the person acting as personal representative for a copy of the will (if any), the death certificate, and a proposed accounting or closing statement.
4. Contact the Register of Wills in the county where the decedent lived for information on whether probate was opened and to see filed documents; find county probate contacts via Maryland Courts – Probate.
5. Check with the Maryland Comptroller about any estate tax filing obligations: Maryland Estate Tax.
6. If necessary, consult a Maryland probate attorney to request a formal accounting or petition the court to enforce rights.

Helpful Hints

• Start by locating the deed and any mortgage statements — title determines a lot.
• Get the death certificate early. Sellers and title companies typically require it to complete a transfer.
• Ask the personal representative for a simple settlement statement showing the sale price, payoff amounts, commissions, fees, and distributions. That statement should show exactly who received what.
• If you find a recorded transfer-on-death instrument or joint-owner listed on the deed, the property may pass outside probate — but documented proof is required at closing.
• Keep records of all communications and requests. If you need the court later, clear records help support your position.
• If the sale already closed, request the closing statement (HUD-1 or closing disclosure) from the title company or personal representative to see the exact distribution of sale funds.
• If someone refuses to share documents or you suspect mismanagement, contact a probate attorney promptly — statutes set time limits for claims and court actions.

Resources

• Maryland Department of Assessments and Taxation (property/deed search): https://sdat.dat.maryland.gov/RealProperty/Pages/default.aspx
• Maryland Courts — Probate information and county Register of Wills contacts: https://www.mdcourts.gov/probate
• Maryland Courts Case Search (judgments and docketed liens): https://casesearch.courts.state.md.us/casesearch/
• Maryland Comptroller — Estate tax information: https://www.marylandtaxes.gov/business/taxes/estate-tax.php

Next practical step: If you want exact numbers for your dad’s house, gather (1) the recorded deed, (2) the mortgage payoff statement, (3) any recorded liens, (4) the proposed sale contract or closing statement, and (5) the name of the personal representative. With those documents a probate or real estate attorney can produce a precise distribution of the sale proceeds or request an accounting from the personal representative.

Disclaimer: This article provides general information about Maryland procedures and resources. It is not legal advice. For advice about your specific situation, consult a licensed Maryland attorney.