1. Detailed Answer

When real property in Texas is sold at a trustee’s sale or a partition sale, the amount received in excess of all liens, costs and taxes is called surplus funds. A former spouse (in a pending or recently finalized divorce) or a surviving spouse or heir (after death) may have a right to those funds if they held a legal or equitable interest at the time the debt was incurred or at the time of sale.

a. Surplus Funds After Divorce

• Community property claim: In Texas, most property acquired during marriage is presumed community property. If the debt or lien was secured by community property, one spouse’s trustee sale that generates surplus funds may leave community funds on the table.
• Divorce decree: The divorce decree must divide community assets, including any unclaimed surplus. If the decree fails to address surplus funds explicitly, the former spouse can petition the court to modify or clarify division under Texas Family Code §§7.001–7.008 (Family Code Chapter 7).
• Procedure:
  1. Determine whether a trustee sale occurred and whether surplus funds remain.
  2. File a motion in the divorce case (or reopen it if final) asking the court to allocate the surplus funds as community property.
  3. Serve notice on all interested parties (the purchaser at the sale, the trustee, lienholders).
  4. Attend a case management hearing and present evidence of community interest (marriage dates, lien date, sale date).

b. Surplus Funds After Death

• Estate asset: When a decedent’s property is sold at a trustee’s sale or a partition sale, the surplus funds become part of the probate estate. The personal representative (executor or administrator) must collect those funds and distribute them under the will or the Texas Estates Code.
• Surviving spouse’s rights: Texas Estates Code §201.001 grants a surviving spouse an elective share of the estate. If the decedent’s will fails to provide for the spouse or provides less than the elective share, the spouse can assert that election to claim part of the surplus funds (Estates Code §201.001).
• Heirs-at-law: If there is no will, the surplus funds pass by intestacy. The personal representative must compile an heirship list and apply Texas Estates Code Chapter 201 (Intestate Succession).
• Procedure:
  1. Notify the probate court that surplus funds exist by filing a supplemental inventory listing the trustee sale surplus (See Texas Estates Code §355.051: Statement of Claim).
  2. Provide all parties, including heirs and creditors, notice of the supplemental inventory.
  3. If the personal representative fails to claim the surplus, an heir or beneficiary can petition the court to compel turnover of the funds.
  4. Present proof of entitlement—death certificate, marriage certificate, will or heirship affidavit.

c. Trustee Sale Surplus Procedure (All Claimants)

Under Texas Property Code §51.0035, both the owner and junior lienholders may claim excess proceeds from a trustee’s sale. Key steps:

• Within 30 days after the sale, file a written claim for surplus funds with the county clerk of the county where the sale occurred (Prop. Code §51.0035).
• Serve a copy of the claim on the trustee and the senior lienholder by certified mail.
• Attend an evidentiary hearing if the senior lienholder contests the claim. Show proof of your interest (deed, divorce decree, marriage certificate, probate documents).
• If uncontested, the court will order the clerk to disburse the funds to the claimant.

2. Helpful Hints

• Gather documents early: deeds, divorce decree, trust documents, proof of marriage or death certificate.
• Watch deadlines: 30 days after trustee sale for surplus claim; time limits to reopen a divorce decree or probate estate.
• Consult court records or the trustee’s file to confirm sale date, amount sold and liens paid.
• Consider mediation in a divorce case to resolve surplus fund allocation without litigation.
• File a probate heirship affidavit if there’s no will—required for unadministered estates.
• Stay organized: maintain a checklist of filings, service receipts and hearing dates.