Detailed Answer

When a property owner in New Jersey dies without a will (intestate) and there are surplus proceeds from a sale of the property (for example, after a foreclosure or sheriff’s sale), those surplus funds are treated as part of the decedent’s estate and must be distributed according to New Jersey intestacy rules and the procedures that govern recovery of surplus funds.

Who gets the surplus funds?

The short answer: surplus proceeds first belong to the decedent’s estate. The personal representative (also called an administrator if appointed because there is no will) must collect the funds, pay valid debts and claims, and then distribute the remaining balance to the heirs determined under New Jersey intestacy law.

Under New Jersey intestacy rules, heirs inherit in a fixed priority. If there is no surviving spouse, no children, and no surviving parent, the decedent’s siblings (or their descendants by representation) are next in line to inherit. In practical terms, that means:

• If the decedent left a surviving spouse or descendants (children, grandchildren), those persons take before siblings.
• If there is no spouse, no descendants, and no surviving parents, the estate passes to surviving siblings. If a sibling died before the decedent but left children, those children usually inherit that sibling’s share (representation).

For an overview of intestate succession in New Jersey, see the New Jersey Courts guidance on wills and intestacy: https://www.njcourts.gov/selfhelp/wills_intestate.html. The statutory framework for probate and intestacy is in Title 3B of the New Jersey statutes (N.J.S.A. Title 3B).

How the surplus is actually recovered and distributed

1. Identification and custody of funds: If a county sheriff or sale officer holds surplus funds after a foreclosure or sheriff’s sale, those funds remain in custody until a lawful claimant demands them or a court orders distribution. Many counties have a process for filing a claim for surplus funds with the sheriff’s office.
2. Who must claim the funds: The estate’s administrator or executor is the proper party to claim surplus funds on behalf of the estate. If no administrator is yet appointed, an heir (including a sibling) can often file a petition with the Superior Court requesting appointment as administrator and then move to recover the surplus. Counties vary in their exact procedural forms and requirements.
3. Priority of payments: Before distributing any surplus to heirs, the administrator must pay valid creditors, taxes, and any expenses of estate administration. Only the net remaining surplus (if any) is distributed to heirs under intestacy rules.
4. Proof required: To obtain surplus funds a claimant typically must provide proof of the decedent’s death (death certificate), proof of the claimant’s identity and relationship to the decedent (birth certificates, family records), and court-issued Letters of Administration or a court order authorizing distribution if an administrator was appointed. If heirs cannot produce Letters of Administration, many counties will still accept a court order or other probate documents showing entitlement.
5. When siblings share: If siblings are entitled under intestacy, the administrator distributes the net surplus to them according to their fractional shares (usually equally among siblings unless representation applies because a sibling predeceased the decedent).

Common complications

• Joint ownership or beneficiary designations: If the property was held in joint tenancy with right of survivorship or had a transfer-on-death/beneficiary designation that passes outside probate, the property (or its proceeds) may pass directly to the surviving joint tenant or named beneficiary instead of through intestacy.
• Outstanding liens and taxes: Secured creditors and unpaid property taxes have priority over heirs. Surplus exists only after these are paid.
• Disputes between siblings: Sibling disputes over entitlement, shares, or administration may require filing an action in probate court to resolve competing claims, remove or replace an administrator, or request an accounting.
• County-level procedures: Each county sheriff’s office and county Surplus Fund Clerk may have different forms and timelines for claiming sheriff-sale surplus funds.

Example (hypothetical)

Mary, a New Jersey homeowner, dies without a will. There is no surviving spouse, no children, and no surviving parents. The bank forecloses and the sheriff’s sale produces $40,000 more than the mortgage and sale costs — a surplus. That $40,000 is part of Mary’s estate. The county sheriff holds the surplus while parties make claims. An administrator is appointed by the probate court. After the administrator pays any valid debts and estate costs, the remaining surplus (net) is distributed equally to Mary’s surviving siblings (or to their descendants if a sibling predeceased Mary), under New Jersey intestacy rules.

Where to look in New Jersey law and court resources

General probate and intestacy guidance — New Jersey Courts: https://www.njcourts.gov/selfhelp/wills_intestate.html

Probate administration procedures and forms — New Jersey Courts: https://www.njcourts.gov/selfhelp/wills_administration.html

Helpful Hints

• Act quickly: If you think surplus funds exist, contact the county sheriff’s office where the sale occurred and the county probate court as soon as possible — there may be procedural deadlines for claims.
• Get an appointment as administrator if necessary: If there is no executor, an heir should petition the probate court for Letters of Administration so someone is authorized to collect and distribute estate assets.
• Gather documents: Prepare a certified death certificate, identification, proof of kinship (birth certificates, family records), the sheriff sale paperwork, mortgage and lien payoff statements, and any probate filings. These are commonly required to claim surplus proceeds.
• Check title and ownership type: Verify whether the property passed outside probate (joint tenancy, survivorship, transfer on death). If so, the surplus may go to the non-decedent owner or beneficiary instead of the estate.
• Expect creditors to be paid first: Surplus is not a “bonus” for heirs until valid debts, taxes, and administration costs are satisfied.
• When siblings disagree, consider mediation: If siblings dispute distribution, a mediated settlement can be faster and less expensive than prolonged litigation.
• Talk to a probate attorney: County rules and legal issues (e.g., representation, heirship disputes, claiming surplus) can be complicated. An attorney can guide next steps, prepare required filings, and protect your rights.

Disclaimer: This article explains general legal principles under New Jersey law for educational purposes only. It is not legal advice, does not create an attorney-client relationship, and may not reflect changes in law or county-specific procedures. For advice about a particular situation, consult a licensed New Jersey attorney or the local probate court.