How can a former spouse or survivor assert entitlement to surplus funds following the owner’s death or divorce?

Detailed Answer

Understanding Surplus Funds in Hawaii

Surplus funds arise when a foreclosed property sale or court-approved sale of an estate yields an amount above liens, costs, and debts. Under Hawaii law, former spouses and survivors may claim these funds but must follow court procedures to establish entitlement.

Asserting a Claim After Divorce

When a property forecloses, the purchaser must deposit surplus moneys with the circuit court under HRS §667-92. To assert a former spouse’s interest:

1. Review the foreclosure docket. Locate the case number, sale date, and deposit order.
2. Gather supporting documents. Provide your divorce decree, property settlement agreement, and recorded deed showing your interest.
3. File a Petition for Surplus Funds. Draft the petition in the foreclosure case. Identify the deposited amount, your relationship to the owner, and legal basis in the divorce decree.
4. Serve all interested parties. Deliver the petition and notice of hearing to the foreclosure purchaser, lender, and any other claimants according to Hawaii Rules of Civil Procedure.
5. Attend the hearing. Present evidence of entitlement. If the court finds you entitled, it will issue an order directing disbursement of your share.

Asserting a Claim After Death

When an owner dies, the personal representative may sell real property under the Probate Code, Chapter 560, Hawaii Revised Statutes. Any sale surplus becomes part of the estate. A surviving spouse can assert entitlement as follows:

1. Identify the probate matter. Obtain the estate docket number and personal representative’s contact information from the Circuit Court Probate Division.
2. File a Creditor’s Claim if needed. Under HRS §560:3-801, file within three months of first publication of notice to creditors. Although a spouse is not a creditor, filing a claim reserves your rights if the sale generates surplus.
3. Petition the court for distribution. If surplus remains after debts, file a Petition to Determine Heirs or successors under HRS §560:2-201. Attach the death certificate and any will.
4. Provide documentation. Submit the marriage certificate, death certificate, and recorded deed to prove your status as surviving spouse or devisee.
5. Attend the hearing. The court will determine distribution based on intestacy rules or will provisions, then order the personal representative to pay the surplus funds accordingly.

Next Steps & Key Documents

At the hearing, courts look for clear proof of legal entitlement. Ensure you bring:

• A certified copy of the divorce decree or property settlement agreement.
• A certified copy of the death certificate and marriage license.
• Recorded deeds, liens, and foreclosure sale orders.
• Proof of service on all interested parties.
• An outline of your calculation of the surplus amount due.

Helpful Hints

• Act promptly. Deadlines in foreclosure and probate vary by court but often run from the date of notice or sale.
• Check local court rules. Circuit court procedural rules govern petitions for surplus funds.
• Gather certified documents. Courts require certified copies for proof of identity and entitlement.
• Keep detailed records. Maintain copies of all filings and proof of service.
• Consider legal counsel. An attorney can help navigate complex foreclosure and probate procedures.