Detailed answer — how to determine exactly where the sale proceeds will go

To know exactly who gets the sale proceeds you must answer three basic questions:

1. Who owned the property and how did title vest when the owner died?
2. Are there liens, mortgages, property taxes, or recorded claims against the property?
3. Is the property part of an open probate estate, or does it pass outside probate to a surviving owner or beneficiary?

1. Check how title was held

If the decedent owned the house:

• As sole owner — the house typically becomes part of the decedent’s probate estate. Sale proceeds are paid into the estate, used to pay valid debts and administration costs, then distributed to heirs or beneficiaries under the will or by intestate succession.
• Joint tenancy with right of survivorship — the surviving joint tenant(s) usually own the property automatically at death. Sale proceeds typically belong to the survivor(s).
• Tenancy in common — the decedent’s share passes to the decedent’s estate and is handled in probate.
• Property with a beneficiary designation or in a trust — the property may pass outside probate to the named beneficiary or the trust, and sale proceeds go to that recipient or trust according to the governing document.

To confirm how title was held in Hawaii, obtain the recorded deed and chain of title from the state Bureau of Conveyances or the applicable county recorder. If you are unsure where to start, the Hawaii State Judiciary has probate guidance here: https://www.courts.state.hi.us/self-help/probate/.

2. Identify secured claims and taxes that must be paid first

When real property is sold, the sale proceeds must first satisfy recorded, valid liens and obligations secured by the property. Typical priority items include:

• Mortgage or deed of trust payoffs (lenders must be paid from sale escrow).
• Recorded tax liens (federal or state) and unpaid county property taxes.
• Mechanic’s liens or other judgment liens recorded against the parcel.

Title companies, escrow agents, or the closing attorney will prepare a payoff ledger and prorations so the escrow statement shows exactly how the gross sale price is allocated. To check recorded liens in Hawaii, search the Bureau of Conveyances (or county records for some islands) or consult the title report provided at closing.

3. Is there an open probate?

If the house is probate property, the personal representative (executor/administrator) handles sale proceeds. Typical steps in probate-related sales:

1. The personal representative obtains court authorization to sell real property if required by the will or by court rules.
2. Proceeds are deposited to the estate bank account or distributed according to court-approved plan.
3. Creditors are paid from the estate. Hawaii probate procedures and creditor claim timing are handled under the probate rules and court supervision — see general probate information at the Hawaii State Judiciary: https://www.courts.state.hi.us/self-help/probate/.

The estate cannot distribute the net proceeds to beneficiaries until valid creditor claims are addressed and the court (if supervising) approves the distribution or the personal representative completes the accounting required by the probate code and the will.

4. If the property passed outside probate

If title passed automatically (joint tenancy, living trust, payable-on-death beneficiary, etc.), the person(s) who succeed to ownership receive the proceeds. Creditors holding liens that are recorded against the property still get priority out of the sale proceeds unless the lien is invalid or unenforceable.

5. Hypothetical fact pattern to show how this works in practice

Hypothetical: Dad owned the house as sole owner and died. There is a mortgage with $150,000 payoff, $5,000 in unpaid property taxes and county special assessments, and a $50,000 judgment recorded against him. The house sells for $300,000. At closing the escrow agent will pay:

• $150,000 to the mortgage holder;
• $5,000 to the county for taxes/assessments;
• $50,000 potentially to the judgment creditor if the judgment created a valid lien on the property;
• closing costs, commissions, and any court-ordered fees or estate administration costs;
• the remaining net balance is deposited to the estate account and handled by the personal representative, who will pay other valid claims and distribute the residue to heirs under the will or under Hawaii’s intestate rules.

6. How to get an exact, line-by-line allocation

Follow these concrete steps to find the exact allocation of sale proceeds:

1. Obtain the closing/escrow settlement statement. This document shows the gross sale price and exact payoffs (mortgage, taxes, liens, commissions, prorations).
2. Ask the escrow agent/title company for the payoff letters they used at closing. Payoff letters identify the creditor and the amount paid.
3. If the property was in probate, request the estate accounting or a copy of the court-approved distribution order from the probate file. Check the probate docket at the county probate court.
4. Obtain a certified copy of the deed transferring the property after the sale and the recorded satisfaction/reconveyance of any mortgages.
5. Request the title report used for closing; it lists recorded liens and encumbrances that were paid from proceeds.

7. Where to look for records in Hawaii

• Hawaii State Judiciary — probate forms and self-help resources: https://www.courts.state.hi.us/self-help/probate/
• Hawaii Revised Statutes (general reference for state law): https://www.capitol.hawaii.gov/hrscurrent/
• Hawaii Department of Taxation — for state tax liens and estate tax guidance: https://tax.hawaii.gov/
• County property records and tax offices (for unpaid county real property taxes and assessments).

8. When to involve an attorney or the court

Consider involving a probate or real estate attorney if:

• There is a dispute about ownership or beneficiaries.
• Multiple claims or judgments attach to the property.
• The personal representative is refusing to provide an accounting.
• You need court approval to sell the property or to distribute proceeds.

If you need help reading closing statements or interpreting recorded documents, an attorney can request documentation and, if necessary, file motions or petitions to compel an accounting or clarification from the personal representative or escrow agent.

Helpful Hints

• Get the closing (escrow) settlement statement first — it shows exactly how the sale money was divided.
• Ask for payoff letters and the title insurance report used at closing; these identify every lien paid from proceeds.
• If the house was probate property, check the probate court docket and ask the personal representative for the estate accounting and distribution order.
• Search recorded documents at the Bureau of Conveyances or county recorder to see mortgages, liens, judgments, or releases recorded against the parcel.
• Contact the mortgage lender and county tax office for current payoff figures before assuming any amounts.
• If you are listed as an heir or beneficiary and the personal representative won’t share documents, you can ask the probate court for an order compelling production or an accounting.
• Keep copies of all documents you receive (closing statements, deeds, payoff letters, accountings) — they are the evidence of how proceeds were allocated.