Detailed Answer

In New Jersey, “surplus funds” arise when a foreclosure or tax sale yields more money than the outstanding liens and costs. Those excess proceeds remain with the county tax collector until a valid claimant demands them. A former spouse or survivor may have a legal right to those funds in two common scenarios: divorce property division and deceased owner estates.

1. Surplus Funds After Divorce

Under New Jersey’s equitable distribution statute, N.J.S.A. 2A:34-23, any asset acquired during the marriage—including a right to surplus funds—must go through property division. To assert a claim:

1. Obtain a certified copy of your divorce judgment or equitable distribution order showing your share of surplus proceeds.
2. File a formal written demand with the county tax collector where the foreclosure occurred. Include:
• Certified divorce judgment.
• Government-issued ID.
• Affidavit of entitlement stating your former spouse’s name, date of divorce, and case number.
3. Wait for the tax collector to verify the lien history and distribute the net surplus to you according to the divorce decree.

Key statute: N.J.S.A. 54:5-113 (Distribution of surplus funds) https://www.njleg.state.nj.us/Statutes/Title54/5/5-113.asp.

2. Surplus Funds After Owner’s Death

If the property owner dies before claiming surplus funds, the surplus becomes an asset of the estate. The process to claim it depends on whether the estate goes through probate:

a. With Probate or Administration

1. Appoint a personal representative (executor or administrator) through the Surrogate’s Court.
2. Secure Letters Testamentary or Letters of Administration.
3. File a petition with the county tax collector, attaching:
• Certified death certificate.
• Letters Testamentary or Administration.
• Affidavit identifying the decedent, date of death, and lien sale.
4. The tax collector reviews the file and pays the surplus to the estate’s representative.

Key statute: N.J.S.A. 3B:2-1 (Personal representative’s appointment) https://www.njleg.state.nj.us/Statutes/Title3B/2/2-1.asp.

b. Without Formal Probate (Small Estate)

When the estate qualifies as a “small estate” (under N.J.S.A. 3B:20-1 et seq.), a surviving spouse or heir may use an affidavit to claim assets up to the statutory limit. To claim surplus funds:

1. Prepare a Small Estate Affidavit under N.J.S.A. 3B:20-5.
2. Attach a certified death certificate, proof of relationship, and the foreclosure lien details.
3. Submit the affidavit to the tax collector. The collector pays the surplus directly if the file is complete.

Key statute: N.J.S.A. 3B:20-5 (Small estate affidavit) https://www.njleg.state.nj.us/Statutes/Title3B/20/20-5.asp.

Helpful Hints

• Gather all documentation before approaching the tax collector: court orders, IDs, certified death certificate.
• Work within statutory deadlines. In New Jersey, claimants generally have one year from the sale to claim surplus funds.
• Confirm the county’s specific filing requirements on its tax collector website.
• Keep copies of every filing and send documents by certified mail when possible.
• Consider consulting a New Jersey attorney for complex estates or contested divorces.