How Can a Former Spouse or Survivor Assert Entitlement to Surplus Funds Following the Owner’s Death or Divorce in Michigan?

1. Detailed Answer

When a property in Michigan sells at foreclosure and generates money beyond the amount owed, those excess proceeds are called surplus funds. A former spouse (through divorce) or a survivor (heir or beneficiary after death) may have a legal interest in those funds. Here’s how you can assert your right under Michigan law:

1.1 Statutory Framework

• Foreclosure Sale and Surplus Distribution: Michigan Compiled Laws (MCL) 600.3238 requires the foreclosure purchaser or court to hold surplus funds after paying mortgage holders, lien creditors, taxes, and costs. The court clerk then distributes any remaining funds.
• Priority of Claims: Under MCL 600.3240, the court clerk pays parties in priority: first owner of record, then persons with recorded interests or judgments, then other claimants. Anyone with an interest must present a written claim within one year of the sale.
  MCL 600.3240
• Time Limit: You have one year from the date of sale to file a claim. After that window closes, the clerk may transfer unclaimed funds to the State Treasurer.

1.2 Steps for Former Spouses

1. Review your divorce judgment or property settlement. It may award you a portion of sale proceeds or equity in the property.
2. Obtain certified copies of your Judgment of Divorce and Decree of Property Division from the family court.
3. File a written claim for surplus funds with the county clerk where the foreclosure occurred. Attach:
   • Certified judgment.
   • Proof of former spousal status (e.g., divorce certificate).
4. Serve copies on the foreclosure purchaser or its attorney as required by court rule.
5. Attend any court hearing if the clerk or purchaser objects to your claim.

1.3 Steps for Survivors (Heirs or Beneficiaries)

1. Determine if the deceased owner left a valid will or died intestate (without a will).
2. If there’s a will, secure Letters Testamentary or Letters of Authority from probate court.
3. If intestate, ask the probate court for Letters of Authority as an heir.
4. File your claim with the county clerk, attaching:
   • Certified death certificate.
   • Letters Testamentary or Letters of Authority.
5. Provide service copies to the foreclosure purchaser or its counsel.

1.4 Clerk Review and Disbursement

• The clerk reviews competing claims in priority order under MCL 600.3238.
• If your documentation proves your interest, the clerk issues a check for your share.
• If the clerk denies your claim, you may file a motion in circuit court within 28 days to contest the decision.

2. Helpful Hints

• Act quickly. The one-year deadline from the foreclosure sale date is strict.
• Gather certified originals early: divorce decree, death certificate, probate letters.
• Keep detailed records of service on all parties to avoid procedural delays.
• If multiple claimants compete, consult an attorney to protect your share.
• Check the county clerk’s foreclosure and surplus fund dockets online or in person.