Detailed Answer

When a Texas property sells at a foreclosure sale and the sale brings in more money than needed to pay the secured debt and allowable costs, the extra money (the surplus) must be distributed to whoever has a legal claim to it. Who gets that surplus depends on who owned the property at the moment the sale was completed and on what legal interests are shown by the recorded documents. A recorded right of survivorship can change who owned the property before or after a sale, but it does not automatically create a bigger claim to surplus funds unless the survivorship actually changed ownership before the sale or otherwise legally affects the recorded title at the time of sale.

Key legal points (Texas)

• Title at the time of sale controls. Courts and the trustee will look at who owned the property when the foreclosure sale closed. If a co‑owner with a survivorship interest died before the sale, the surviving owner likely held full title at sale time and is the main claimant to any surplus.
• If the owner died after the foreclosure sale, survivorship does not retroactively change who owned the property at the sale—any surplus will be distributed based on ownership and claims that existed at sale time.
• If the deed explicitly created a joint tenancy or other express right of survivorship and the survivorship event (death) has occurred before the sale, the survivor’s ownership is usually recognized as sole owner for distribution purposes.
• If the deed does not use clear survivorship language (for example it creates a tenancy in common), or if the recorded instruments are ambiguous or contradictory, competing claimants may have to litigate priority through a court action to determine entitlement to the surplus.
• Surplus funds are typically disbursed only after claimants file proper documentation proving their legal interest (deeds, death certificates, affidavits, probate orders) and after any senior liens or statutory priorities are honored.

How this plays out in common scenarios

Below are typical hypotheticals that show how a survivorship statement on a deed can affect surplus claims:

• Co‑owners with right of survivorship; one dies before sale: The survivor holds title at sale and ordinarily is entitled to the surplus as the sole owner.
• Co‑owners with right of survivorship; one dies after sale: Both co‑owners held interests at sale; the surplus will be allocated according to the ownership interests that existed at sale time. A later assertion of survivorship does not enlarge a surviving owner’s share of funds from a sale that already occurred.
• Tenancy in common (no survivorship language): Each owner’s fractional interest exists both before and after a co‑owner’s death (unless title vests otherwise by probate). Surplus distribution follows those fractional interests or may require court resolution if contested.
• Disputed or poorly worded deeds: If the deed’s wording is unclear, the party claiming survivorship may have to establish the correct interpretation in court before receiving surplus funds.

Practical steps to assert a survivorship claim to surplus funds

If you believe a right of survivorship gives you a greater share of surplus proceeds, follow these steps:

1. Gather the recorded deed, deed of trust, the foreclosure sale paperwork, and the trustee’s deed (if provided).
2. Determine the exact date and time of the foreclosure sale and whether the claimed death (if any) occurred before that moment.
3. Collect proof: certified death certificate, certified copy of the recorded deed, any probate or other court documents showing title transfer, and an affidavit describing the chain of title and your claim.
4. Contact the trustee or the party holding surplus funds and present your claim and documentation. Many trustees will require a written claim and supporting papers before releasing funds.
5. If the trustee or other claimants dispute your claim, be prepared to file a judicial action (for example, an interpleader, declaratory judgment, or a suit to quiet title) so a court can decide who is legally entitled to the surplus.

Relevant Texas law (where to look)

Texas law governs foreclosure sales and the distribution of funds after sale. A useful starting place is Texas Property Code Chapter 51, which covers sale under a deed of trust and related procedures. You can review the chapter here: Tex. Prop. Code, Ch. 51. If distribution of surplus funds or competing claims proceeds to litigation, Texas appellate decisions and local court rules will affect procedure and required proof.

Bottom line

A right of survivorship on a deed can give a surviving owner the full ownership interest and therefore the right to all surplus funds—but only if the survivorship event changed who owned the property before the foreclosure sale. If the sale occurred first, survivorship declared later usually cannot be used to increase a share of surplus proceeds. Where ownership is unclear or contested, you will likely need to submit proof to the trustee or file a court action to establish entitlement.

Disclaimer: This article is for educational purposes only and is not legal advice. It does not create an attorney‑client relationship. For help applying these rules to your situation, consult a qualified Texas real‑estate attorney.

Helpful Hints

• Time matters: confirm the exact sale date and time. Whether death occurred before or after that moment often decides entitlement.
• Use certified documents: trustees and courts expect certified death certificates, recorded deed copies, and any probate or court orders supporting a transfer of title.
• Read the deed language carefully: words like “joint tenants with right of survivorship” or “with right of survivorship” matter. Ambiguous language may require a lawyer and a court to interpret.
• File early: if you think you have a claim, submit a written claim and supporting proof to the trustee or the entity holding the surplus as soon as possible to preserve your position.
• Expect competing claims: other lienholders or heirs may assert rights. An interpleader or declaratory judgment may be necessary to resolve competing claims to surplus funds.
• Get local counsel: foreclosure and post‑sale procedures vary by county and case. A Texas real‑estate attorney can evaluate your deed, title history, and the chain of events and recommend the proper filing to protect your claim.