How Can a Former Spouse or Survivor Assert Entitlement to Surplus Funds Following the Owner’s Death or Divorce?

Detailed Answer

In Maryland, “surplus funds” are the money left over after a court-ordered sale of property (often a foreclosure sale) once all liens, fees, and costs have been paid. Both former spouses (after a divorce) and survivors (after a property owner’s death) may have a legal right to those funds. Below is a step-by-step guide to asserting your claim.

1. Identify the Source of Surplus Funds

• Judicial sale of real estate under Maryland Rule 14 (commonly foreclosure).
• Sale of marital property governed by a divorce decree.
• Sale of estate property under Maryland probate procedures.

2. Determine Your Legal Status

Former Spouse: Review your final divorce decree or settlement. Maryland Family Law §8-205 requires the court to divide marital property equitably. If the decree awards you a share of equity in the property that generated a surplus, you are entitled to a proportional share of those funds.

Survivor/Heir: If the owner died with a will, you must have been named as beneficiary or personal representative. If the owner died intestate, Maryland Estates & Trusts §3-104 lists the order of inheritance. As a surviving spouse or heir at law, you may claim any surplus from estate assets sold under court supervision. (Md. Est. & Trusts §3-104)

3. File a Petition or Motion in the Original Foreclosure or Probate Case

You must file a written motion or petition in the circuit court where the sale occurred. In foreclosure cases, Maryland Rule 14-305(c) governs distribution of surplus funds. Include:

• The case name, docket number, and court location.
• Your name, address, and relationship to the original owner.
• A copy of the divorce decree or death certificate and letters testamentary/administration (for survivors).
• A clear statement of how much you believe you are owed.

Serve your petition on all interested parties, including the purchaser at the sale and any lienholders listed in the court’s file. Maryland Rule 14-305(b) requires notice to lien claimants.

4. Attend the Hearing and Provide Evidence

The court will schedule a hearing. Be prepared to explain why you have a legal claim to the surplus. Present:

• The divorce decree or property settlement agreement.
• Letters testamentary or letters of administration (for estates).
• Proof of service on all parties.

5. Alternative: Claim Through Maryland’s Unclaimed Property Division

If the surplus remains unclaimed for more than one year after the sale, it is considered unclaimed property under the Maryland Unclaimed Property Act. You can file a claim with the State Treasurer’s Office online:

• Maryland Commercial Law §17-101 et seq. governs unclaimed property. (Md. Comm. Law §17-101)
• Visit Maryland’s Unclaimed Property search portal at https://www.marylandtaxes.gov/Unclaimed-Property/ to look for funds and submit a claim.

Note the one-year dormancy period and deadlines for filing a claim.