Are Surviving Spouses and Children Eligible to Receive Excess Proceeds From the Foreclosure Sale of a Decedent’s Property?

The purpose of a foreclosure sale is to gain the necessary funds to pay off any unpaid taxes or other debts. In some cases, after these taxes and debts are satisfied, money may still remain. This leftover cash is known as excess proceeds, and property owners can claim this money following a foreclosure sale. 

Property owners have two years from the date of a foreclosure sale to file for a sale’s excess funds. The question is: What happens if a property owner dies before claiming these funds?

Transferred Right

Generally, the right to claim excess funds doesn’t end with a property owner’s death. The right to claim those funds transfers to their surviving spouse or children. 

Surviving spouses and children must still file for excess funds within two years of the foreclosure sale. The two-year period doesn’t restart because of a property owner’s death—just as they inherited the right to claim those funds, they “inherited” the time that had already passed.

For example, a property owner dies three years after a foreclosure sale without claiming the funds. Their surviving spouse or children cannot apply for or receive those proceeds because the two-year time period has already elapsed.

In comparison, a property owner dies six months after a foreclosure sale. His surviving spouse or children have eighteen months to claim the excess funds.

Factors to Consider

Every case is different, and claiming excess funds after a property owner dies is no different. Here are just a few of the factors that may affect who has a right to claim the excess funds:

• Whether the deceased individual had a will
• Who has the right to inherit from the deceased’s estate
• The deceased’s living family members

For example, a property owner dies without a will and is unmarried. They had two children from a previous marriage and had a long-time significant other. In this situation, the two children would likely split the excess funds, but the significant other would not.

If, however, the property owner was married to their long-time significant other at the time of death, the spouse would likely split the excess funds with the two children. That the property owner remarried doesn’t lessen the children’s right to a share of the funds.

If you’re facing inheritance issues related to real estate, a skilled Texas property law attorney can help. The attorneys at Manfred Law help Texas property owners resolve property issues. Call us at 713-547-5460 or contact us online to schedule your consultation.