Understanding and Claiming Surplus Funds After a Foreclosure in Michigan

Disclaimer: I am not a lawyer. This article explains general Michigan law and common procedures to help you know what to do next. It is not legal advice. For advice about your specific situation, consult a Michigan probate or real estate attorney or the local probate court.

Quick answer

If a Michigan property owned by your deceased parent sold at foreclosure and produced surplus funds (sale price higher than mortgage, fees, and other allowed liens), the surplus generally belongs to the former owner or the owner’s successors in interest. To collect it you must show legal authority to receive the decedent’s assets—usually by presenting letters of authority from probate court (personal representative or administrator), a valid transfer-on-death or trust document, or other proof of ownership/authority. If the estate was never opened, you will typically need to open probate or use an appropriate small‑estate procedure (if eligible) or have the court order distribution.

How surplus funds work under Michigan law

When a foreclosure sale brings more money than necessary to pay the secured debt and permitted costs, the extra money becomes a surplus. Under Michigan foreclosure procedures, those surplus funds are to be paid to whoever is legally entitled to them (the former owner or the owner’s successors or creditors with priority). The foreclosure sale and distribution process is governed by the Michigan Compiled Laws on foreclosure and sheriff’s/commissioner’s sales (see the foreclosure statutes: MCL 600.3201 et seq.).

Who can claim the surplus if the homeowner is deceased and the estate was never probated?

• If the decedent left a valid will and you are the appointed personal representative (executor), you claim in that capacity.
• If the decedent died intestate (no will), the person appointed by the probate court as administrator of the estate can claim the funds on behalf of heirs.
• If the property passed outside probate (for example, it was held in a living trust or joint tenancy with right of survivorship, or there is a valid transfer-on-death instrument), the named successor (trustee or surviving joint tenant or TOD beneficiary) can usually claim the funds without probate—by providing the trust instrument, letters of authority from the trustee, or other proof.
• If no probate has been opened and no non-probate device applies, you normally must open probate or obtain court authorization to get the surplus.

Step-by-step: What to do to claim surplus funds in Michigan

1. Confirm whether a surplus exists and who holds it. Contact the foreclosure commissioner, sheriff, or county treasurer who handled the sale. Ask whether a surplus was generated and whether it is currently held by the commissioner/treasurer or has been turned over to the court.
2. Gather documents that show your parent’s ownership and your right to act. Typical documents to collect:
   • Death certificate
   • Recorded deed showing ownership before foreclosure
   • Foreclosure sale paperwork and the trustee/commissioner report
   • Will, trust documents, beneficiary designation, or recorded transfer-on-death paperwork (if any)
   • Any probate court documents if probate was previously opened
   • Proof of your identity and relationship (photo ID, birth certificate, etc.)
3. Determine whether you can claim without probate.
   • If the property was in a revocable living trust and you are the successor trustee, provide the trust excerpts or certification and the trustee’s letters to the party holding the surplus.
   • If the property had a surviving joint owner, that owner may present proof of survivorship and claim the funds.
   • If none of these apply, you will likely need probate authority to collect the decedent’s assets.
4. Open probate or use a small‑estate procedure if needed.

   Most surplus claims require legal authority from the probate court. In Michigan, probate courts handle appointment of personal representatives and distribution of assets under the Estates and Protected Individuals Code (EPIC). See the EPIC statutes: MCL 700.1101 et seq.

   Michigan may offer simplified procedures for small estates or collection of certain personal property without full administration, but eligibility rules and dollar limits vary. Contact the local probate court for exact forms and thresholds, or consult an attorney.

5. File a claim or petition to receive the funds.

   Once you have legal authority (letters testamentary, letters of authority, or trustee certification), present them to the entity holding the surplus. If the holder refuses or if multiple claimants exist, file a petition in the appropriate Michigan court (probate court or circuit court) asking the court to order payment of the surplus to you or to determine rightful recipients.

6. If contested, be prepared for litigation or settlement. Competing heirs or creditors can create disputes. Courts will resolve claims by applying the probate rules of succession (if intestate) or the terms of the will/trust and by evaluating creditor priority. If the holder has already deposited funds with the court, you may need to file a motion for distribution.

Where to get forms, which courts to contact, and useful Michigan resources

• Michigan Legislature — Foreclosure statutes (statutory rules on mortgage foreclosures and sales): MCL 600.3201 et seq.
• Michigan Legislature — Estates and Protected Individuals Code (probate law): MCL 700.1101 et seq.
• Michigan Courts (general court and probate information, local court contacts, and self-help materials): courts.michigan.gov
• Contact the county sheriff’s office, county treasurer, or foreclosure commissioner where the sale occurred. They can tell you whether they hold a surplus and their claiming process.

Common scenarios and what they mean for claiming surplus funds

• Decedent had a living trust: The successor trustee usually can claim surplus funds by presenting the trust and trustee certification — often no probate required.
• Property held jointly with right of survivorship: The surviving joint owner generally owns the property automatically and should be able to claim surplus with deed records and proof of survivorship.
• No will, no probate opened: You will typically need to open an estate case and be appointed administrator to receive the surplus on behalf of heirs.
• Multiple heirs or disputes: The probate court resolves competing claims. Expect a court process if parties disagree.

Helpful hints

• Act quickly. While time limits vary, delays can complicate locating funds, notifying interested parties, and preserving rights.
• Start by contacting the foreclosure commissioner, sheriff, or county treasurer who handled the sale — they can tell you if a surplus exists and what documents they require.
• Gather basics before contacting the court: death certificate, deed, mortgage payoff information, foreclosure sale paperwork, any will or trust, and ID for the claimant.
• If you see a trust, review it carefully. Trusts commonly avoid probate and let successor trustees collect assets directly.
• If the holder asks for proof of authority and you don’t have letters yet, ask the holder what they will accept and whether they will hold the funds while you open probate.
• If the amount is significant or there are disputes, consult a probate or real estate attorney experienced in Michigan foreclosure and estate matters.
• Check local court websites or call the probate court clerk for specific local forms or small‑estate alternatives.

Typical timeline and costs

Simple uncontested claims where there is a trust or clear successor can be resolved in weeks once you provide required documents. Opening a probate estate, getting appointed, and completing distribution can take several months or longer depending on notice requirements, creditor claims, and whether the estate is complex. Court filing fees, attorney fees (if you hire counsel), and costs to obtain documents (certified death certificates, recorded copies of instruments) are common expenses.

When to get professional help

Hire an attorney if:

• Multiple heirs dispute the surplus
• You cannot locate necessary title records
• The holder refuses to release funds without a court order
• The estate has creditors making competing claims

An attorney can help you choose the right probate filing (full administration vs. simplified procedures), prepare petitions to the court, and represent you if other claimants contest the surplus.

Bottom line

If your deceased parent’s foreclosed property produced surplus funds in Michigan and no probate was opened, you will probably need legal authority (probate letters, trustee certification, or other proof) to collect those funds. Begin by contacting the foreclosure commissioner or county office that handled the sale, collect the decedent’s title documents and death certificate, and either present non‑probate authority (trust, survivorship) or open probate to be appointed personal representative. When disputes or complexity arise, consult a Michigan probate or real estate attorney.