Detailed answer — how to trace sale proceeds under Alabama law

When a homeowner dies, the question “who gets the sale proceeds?” depends on how the house was owned, whether the owner left valid estate documents, and whether there are mortgages, liens, taxes, or creditor claims. Follow these steps to determine the destination of sale proceeds:

1. Identify how title was held before the sale.

   Check the deed and public property records at the county recorder/registrar of deeds (or county probate office where deeds are filed). Common ownership forms that control distribution are:

   • Sole ownership in the decedent’s name — usually requires probate or administration.
   • Joint tenancy with right of survivorship or tenancy by the entirety — surviving co-owner typically takes the property automatically outside probate.
   • Ownership in the name of a trust (living trust) — trustee usually transfers or sells the property under trust terms without probate.
   • Deed with a named beneficiary or a transfer-on-death/beneficiary deed — may pass directly to the named beneficiary if state law and the deed allow.

   Who appears as the owner on the recorded deed determines whether the property is a probate asset or a non-probate asset.

2. If the property passed outside probate, proceeds normally go to the transferee named by the deed or trust.

   Examples: a surviving joint tenant will typically be the owner and receive sale proceeds; a trustee must distribute proceeds per the trust instrument. To confirm, get a certified copy of the recorded deed or trust and, if needed, a letter or certification from the county recorder or the trustee.

3. If the property is a probate asset, locate the probate file and the personal representative (executor/administrator).

   In Alabama, when a decedent owned property solely in their name and no valid non‑probate transfer applies, the estate generally must go through probate administration so an executor or administrator can sell the property and distribute proceeds. The probate court issues “Letters Testamentary” or “Letters of Administration” that identify who can act for the estate and receive funds on behalf of the estate.

   To find the probate file and the appointed personal representative, contact the probate court in the county where the decedent lived or where the property sits. The court’s file will show the will (if any), the appointed representative, and any court orders authorizing sale or distribution.

4. Understand how the sale proceeds are applied before distribution.

   Sale proceeds are not simply handed to heirs. Typical first steps (in order) include:

   • Paying the mortgage and any recorded liens (tax liens, mechanic’s liens, judgments) that have priority against the property.
   • Paying costs of sale (real estate commissions, closing costs) and expenses of estate administration authorized by the probate court.
   • Paying funeral expenses and certain statutory allowances if the law provides them.
   • Paying valid creditor claims against the estate, to the extent estate assets are available.
   • After debts and costs, distributing the remainder according to the will or, if there is no will, by Alabama’s intestacy rules.

   Because liens on the property must be satisfied from the sale proceeds at closing, you can usually see the expected distributions on the preliminary HUD/Closing Statement provided before closing.

5. Obtain records that show how proceeds will be handled or have been handled.

   Ask for or obtain:

   • A certified copy of the deed (recorded deed).
   • If applicable, a certified copy of the will and the letters testamentary/administration from probate court.
   • An abstract of title or title search report showing liens and encumbrances.
   • The closing statement (HUD-1 or Closing Disclosure) for the sale showing payoff amounts and net proceeds.
   • Probate court docket entries and signed orders authorizing sale and distribution (the probate clerk can provide these).

   With those documents you can trace each dollar: payoffs shown on the closing statement will match amounts sent to lien holders at closing, the probate accounting will show estate receipts and distributions, and the probate court record will show court-approved distributions to beneficiaries.

6. If you cannot access documents, contact the responsible parties and the probate court.

   Speak with:

   • The closing agent or title company handling the sale — they can provide the closing statement and payoff figures used at closing.
   • The personal representative (executor/administrator) — they must account for estate funds to the probate court and to heirs/beneficiaries.
   • The county probate clerk — they maintain records of probate cases and can tell you whether the estate is open and who was appointed.
7. Where distribution is set by the will or by intestacy.

   If there is a valid will, distribution generally follows its terms (subject to creditor claims and court supervision). If there is no will, Alabama intestacy rules control who inherits. To see how intestacy works in Alabama, consult the Code of Alabama and the local probate court; the Alabama Legislature’s website provides access to state statutes: Alabama Legislature (Code of Alabama). For practical probate information and court contacts, the Alabama Judicial System is a useful resource: Alabama Judicial System.

8. If you suspect wrongdoing or unclear accounting, you can ask the probate court to review the executor’s accounting.

   Heirs and beneficiaries typically have the right to request an accounting from the personal representative. If the accounting is incomplete or you suspect mismanagement, you may file a petition with the probate court to compel an accounting or to remove the personal representative. The probate docket and local court rules show how to request these remedies.

Practical example (hypothetical): If your father owned the house solely in his name, left a will naming an executor, and the estate is in probate, the executor will sell the house under court authority or per the will. At the sale, the title company will pay the mortgage lender and any recorded liens from the proceeds, take out closing costs and commission, and then place the net sale funds into the estate account. The executor will pay approved creditors and expenses, then distribute the remainder to beneficiaries under the will or to heirs under Alabama intestacy law. The probate file and the closing statement will show each step.

Where to look for official Alabama resources:

• Alabama Legislature (Code of Alabama, for statutes on wills, probate, and administration): https://www.legislature.state.al.us/
• Alabama Judicial System (probate court information and contacts): https://judicial.alabama.gov/

Helpful hints — quick checklist to find exactly where the proceeds will go

• Start at the county recorder/registrar of deeds: pull the recorded deed to see current legal owner and any beneficiary designations.
• Pull a title report or get an abstract: it lists mortgages, judgments, tax liens, and other encumbrances that will be paid from sale proceeds.
• Contact the closing agent or title company for a copy of the Closing Disclosure/HUD showing who gets paid at closing and the net to the seller or estate.
• Check probate court records: the probate clerk can provide the estate file, letters of appointment, and court orders about sale and distribution.
• If property was held in a trust, request a copy of the trust or a certification from the trustee — trust property usually avoids probate.
• Ask for an estate accounting from the personal representative; beneficiaries can request one and the court can compel it.
• If you find irregularities (missing payoffs, unexplained deductions), consult an attorney before accepting an accounting as final.

When to get a lawyer: If you cannot find required records, if an executor refuses to account, if you suspect lien priority disputes, or if creditors or multiple heirs contest distribution, a probate attorney can request court orders, review titles and payoffs, and protect your rights. A local probate or estate attorney can also help you interpret Alabama statutes that apply to your situation.