How Can a Former Spouse or Survivor Claim Surplus Funds After the Owner’s Death or Divorce in Nevada?

1. Detailed Answer

When a Nevada property owner defaults on a mortgage, the lender may foreclose and sell the property at a sheriff’s sale. If the sale price exceeds the total debt (loan balance, interest, fees, costs), the excess is known as surplus funds. Both a former spouse and a survivor (heir or beneficiary) may have legal rights to those funds if they held an interest in the property.

1.1. Former Spouse Rights

In Nevada, community property rules typically govern marital interests. Under NRS 123.120, each spouse holds a one-half interest in property acquired during the marriage. After divorce, the final decree divides community assets. A former spouse who did not receive their fair share of surplus proceeds may assert a claim by:

Reviewing the divorce decree to confirm property distribution language and any reserved community claims.
Filing a petition to determine entitlement to surplus in the justice court that conducted the foreclosure sale. See NRS 40.439.
Serving the petition on the foreclosure purchaser (usually the lender) and any known lienholders.
Attaching certified copies of the divorce decree, final accounting of community assets, and proof of marital interest.
Attending a court hearing. The justice court will determine each claimant’s share and enter an order distributing the funds.

1.2. Survivor (Heir or Beneficiary) Rights

If the owner died before or after foreclosure, the estate may hold rights to surplus funds. Nevada law provides two main routes:

1.2.1. Small Estate Affidavit

When the decedent’s personal property (including surplus proceeds) totals $100,000 or less, a survivor may use a small estate affidavit under NRS 146.060. Steps include:

Preparing the affidavit listing all assets (including anticipated surplus funds).
Attaching a certified death certificate and inheritance documents (e.g., will, trust, or proof of heirship).
Filing the affidavit with the court or presenting it to the sheriff’s office handling the surplus.
Waiting three court days for objection. If no valid objection arises, the claimant may collect the funds.

1.2.2. Formal Probate

For larger estates or when heirs dispute distribution, survivors must open a probate case under NRS 147. The executor or personal representative:

Petitions for letters testamentary or letters of administration.
Identifies and lists the surplus funds as an estate asset.
Notifies creditors and heirs per statute.
Obtains a court order directing the justice court to release surplus funds to the estate.
Distributes the funds to heirs or beneficiaries per the will or Nevada’s intestacy laws.

2. Helpful Hints

File your claim within 90 days of the foreclosure sale to avoid waiver of rights. See NRS 40.430.
Gather all supporting documents: foreclosure sale notice, deed of trust, divorce decree, death certificate, and proof of heirship.
Use certified court copies. Non-certified documents may delay your claim.
Verify the justice court handling the sale. County listings appear at NVCourts.gov.
Consider consulting a probate or real estate attorney when estate issues or property interests are complex.
Track deadlines in both family and probate court matters to protect your community or inheritance interest.