Detailed Answer
When a foreclosure or forced sale of real estate generates funds exceeding lien payoffs, those excess funds—called surplus proceeds—become assets of the deceased owner’s estate under Maryland law. If the property was titled solely in the deceased spouse’s name, the personal representative (executor or administrator) collects the surplus proceeds and distributes them according to the decedent’s estate plan or, if there is no valid will, under Maryland’s intestate succession rules.
1. Under a Valid Will
If the decedent left a properly executed will, the personal representative follows the will’s instructions for distributing estate assets, including surplus proceeds. The representative must:
- File a probate petition with the Register of Wills.
- Provide notice to heirs and potential claimants.
- Collect all assets, including surplus proceeds held by the circuit court clerk.
- Pay debts and administrative expenses.
- Distribute remaining funds per the will’s terms.
2. Intestate Succession (No Will)
When there is no will, Maryland Code, Estates and Trusts §3-101 et seq. governs distribution:
- § 3-101 defines “intestate” and who may inherit.
- § 3-103 sets the share of a surviving spouse and issue (children).
Under § 3-103, if the decedent leaves a surviving spouse and one or more children, the spouse receives:
- The first $50,000 of the estate’s personal property (plus certain family allowances).
- One-half of the balance of the estate.
The children share the remaining one-half equally. If there is no surviving spouse, the children inherit all; if no children or spouse, next of kin (parents, siblings) inherit.
3. Claiming Surplus Proceeds
To claim surplus proceeds from a foreclosure sale under Maryland Rule 14-305:
- File a claim with the circuit court clerk in the county where the sale occurred.
- Provide proof of your legal interest (e.g., letters testamentary or letters of administration).
- Wait for the clerk to confirm no higher-priority claim exists before receiving funds.
Helpful Hints
- Identify the personal representative early to avoid delays in claiming surplus proceeds.
- Keep certified copies of letters testamentary or administration for court filings.
- Consult the Register of Wills in the county where the decedent lived for probate forms and deadlines.
- Surviving spouses may have additional rights under Maryland’s elective share statutes.
- Missing or unknown heirs can slow distribution—consider publishing a notice to unknown claimants.