Introduction

When a property is lost to foreclosure or a tax deed sale, the sale may generate surplus funds — money left over after the debts are paid. But one of the most common questions families face is: Who actually has the right to claim those funds? The answer depends on succession laws — the legal rules that decide who inherits when a homeowner has passed away. These rules vary from state to state, but the basic principles are similar across the country.

The First in Line: The Homeowner

If the original homeowner is alive, they are the primary claimant. The court recognizes them as the rightful recipient of surplus funds, provided no other liens or judgments take priority.

When the Homeowner Has Passed Away

If the homeowner is deceased, the funds don’t disappear — but they must be claimed by the rightful heirs. This is where succession comes into play.

● Spouses – In many states, a surviving spouse is the first eligible heir.

● Children – If no spouse exists, children (biological or adopted) are often next in line.

● Parents & Siblings – If there is no spouse or children, the claim may pass to parents or brothers and sisters.

● Extended Family – In the absence of close relatives, courts may look to nieces, nephews, cousins, or other extended kin.

Intestate vs. With a Will

How the funds are distributed depends on whether the homeowner left a will:

● With a will – The executor follows the instructions of the will, and the funds become part of the estate for distribution.

● Without a will (intestate) – State intestacy laws decide the order of succession. Each state has its own chart of who inherits first, second, and so on.

Why Probate Matters

Even if heirs are known, probate is often required to establish legal authority. The court may appoint a personal representative (administrator or executor) to handle claims. This representative can then file for the surplus funds on behalf of the estate and distribute them properly.

Common Complications

Eligibility isn’t always straightforward. Issues that can complicate claims include:

● Multiple heirs with competing claims — when siblings or relatives can’t agree on distribution.

● Disputed family relationships — cases where heirs must prove legal standing (e.g., stepchildren, estranged relatives).

● Creditors or lienholders filing against the funds — debts that can cut into what heirs receive.

● Missing or incomplete paperwork — lack of death certificates, wills, or ownership proof.

What Families Should Do

If you believe your family may be eligible for surplus funds:

1. Identify the rightful heirs – Confirm who may legally qualify under state probate rules.

2. Clarify who has a claim – Establish whether you or other relatives are eligible to file.

3. Confirm eligibility – Make sure you (or your family) meet the legal requirements to claim.

4. Establish heirship – Courts may require proof of your relationship to the deceased owner.

Final Thoughts

Succession rules make clear that surplus funds are not “lost” when a homeowner passes away — they simply follow a legal path to the rightful heirs. By understanding eligibility and succession, families can take the right steps to secure what legally belongs to them.