Can a right of survivorship in the deed give you a larger share of foreclosure surplus funds?

Short answer: Possibly — but it depends on how the deed created ownership, the timing of death and the foreclosure, the order of lienholders, and whether courts or the clerk handling the sale recognize and accept your claim. You will usually need clear documentary proof (the recorded deed, death certificate, and title history) and may have to file a claim or appear in court to collect surplus funds.

Disclaimer

This article is informational only and not legal advice. I am not a lawyer. For advice about a specific situation, consult a Tennessee attorney who handles foreclosure, real property, or probate matters.

How surplus funds from a foreclosure generally get distributed in Tennessee

When a foreclosure sale generates more money than is necessary to pay the foreclosing lien, the extra money is called the surplus (or excess proceeds). Tennessee’s foreclosure statutes and court procedures govern how surplus proceeds are handled, including providing a process for notifying and paying lienholders and owners. See the Tennessee statutes governing foreclosure sales (Title 35, Chapter 5). For the general statutory framework, see Tenn. Code Ann. Title 35, Chapter 5: https://www.capitol.tn.gov/legislation/current/title35/chapter5.html

In most cases, priority is governed by the recorded lien order: senior liens are paid first, then junior liens, and any remainder belongs to the property owner(s) at the time of the sale (or their successors in interest). If there are competing claimants to the remainder, the court or sale clerk may require claims to be litigated or may hold funds while liens and ownership are clarified.

What does a “right of survivorship” mean?

A right of survivorship means that when one owner dies, the deceased owner’s interest automatically transfers to the surviving owner(s) by operation of law — without passing through probate. Common ways a survivorship interest can be created include: joint tenants with right of survivorship, or tenancy by the entirety (typically for married couples). Whether the deed actually created a survivorship interest depends on the deed’s language and how Tennessee law interprets that language.

Key questions courts and clerks will ask when you assert survivorship to claim surplus funds

Does the recorded deed include language creating a joint tenancy or tenancy by the entirety (for married couples), or language of survivorship? (E.g., “as joint tenants with right of survivorship” or “as tenants by entirety.”)
Was the deed properly recorded before the foreclosure action and before other competing liens?
Did the owner die before or after the foreclosure sale? Timing matters because the identity of the owner at the moment of sale often determines who is entitled to surplus funds.
Are there recorded junior liens or other claimants whose rights must be paid from the surplus before distribution to the owner(s)?
Has anyone else filed a competing claim (creditors, heirs, probate estate)? If so, funds may be held until the dispute is resolved.

Typical outcomes under common fact patterns (hypothetical examples)

Hypothetical A — Joint tenants; one dies before foreclosure sale

Fact pattern: Deed recorded in 2015 names A and B as “joint tenants with right of survivorship.” A dies in 2020. A mortgage secured by the property was foreclosed and sold in 2022, producing surplus funds.

Likely result: If the death of A occurred before the foreclosure sale, B likely owned the whole property at the time of sale by operation of survivorship. Therefore, B would generally be the rightful owner entitled to any surplus funds after valid liens are paid. But B still must present proof (death certificate, certified copy of deed) and may need to file a claim with the court or clerk administering the sale if the clerk does not automatically release funds.

Hypothetical B — Tenancy in common (no survivorship); one dies before sale

Fact pattern: Deed names A and B as “tenants in common” (no survivorship). A dies in 2020. Foreclosure sale in 2022 produces surplus.

Likely result: A’s share typically passed to A’s heirs or estate, not to B automatically. The estate or heirs may have a claim to A’s share of any surplus. B cannot assert a survivorship right because the deed did not create it.

Hypothetical C — Death after the sale

Fact pattern: A and B are joint tenants; foreclosure sale occurs while both are alive and creates surplus. After the sale but before distribution, A dies.

Likely result: Courts typically look to who owned the property at the time of sale. If both were owners at sale, the surplus belongs to the owners in the shares they owned at sale. A’s interest at the time of sale may pass to A’s estate upon A’s death (unless Tennessee law provides otherwise), and B’s surviving-interest doctrines may not retroactively change the ownership at the time of sale. This can produce disputes and often requires litigation or clerk direction.

Procedural steps to assert a survivorship claim for surplus funds in Tennessee

Obtain certified copies of the recorded deed(s) and the property’s chain of title.
Get a certified death certificate for the decedent (if applicable) and any affidavit of survivorship required by local practice.
Determine who handled the foreclosure sale (county clerk, master in chancery, or substitute trustee) and whether surplus funds were deposited with the clerk or master. Ask how to file a claim for surplus.
File a written claim with the clerk or court and include documentary proof of ownership and survivorship. If the clerk refuses to release funds because of competing claims, you may need to file a petition or be part of an interpleader action.
If other claimants appear, be prepared to litigate priority in court — often through a petition to distribute surplus funds or interpleader action.

Practical considerations and common pitfalls

Clerks and trustees are cautious. If multiple parties claim the surplus, they may require a court order before distributing funds. That can lead to litigation.
Recorded deed language controls. Ambiguous deed wording may not create a survivorship right — courts interpret deeds according to Tennessee precedent and deed language.
Timing is critical. Whether death occurred before or after the sale can change who is entitled to the surplus.
Mortgages and foreclosing liens can extinguish or affect interests differently. A foreclosure that enforces a mortgage may eliminate the foreclosed owner’s entire interest; surplus distribution then follows statutory priorities.
If the property was owned as tenancy by the entirety (married spouses), special rules may apply for creditor claims and survivor rights; these can be complex when the debt was the joint obligation or only in one name.

Helpful hints — what to do now

Collect the deed, certified death certificate (if applicable), mortgage and recorded liens, and the foreclosure sale paperwork.
Contact the clerk of the court or the trustee who handled the sale to learn where the surplus went and whether any claims have already been filed.
Run a title search (or hire a title company) to confirm recording dates and lien priority.
Act quickly: procedural deadlines and the risk of competing claimants mean delays can jeopardize recovery.
If you expect contested claims or the other side disputes survivorship, hire a Tennessee attorney experienced in real property and foreclosure law to represent you or to file a petition to distribute surplus funds.

Where to look in Tennessee law

Primary statutes and court rules that govern foreclosure sales and the handling of proceeds are in Tennessee’s statutes for executions and foreclosure sales (Title 35, Chapter 5). See the Tennessee Code: Tenn. Code Ann., Title 35, Chapter 5: https://www.capitol.tn.gov/legislation/current/title35/chapter5.html

When you should consult a lawyer

Talk to a Tennessee attorney if any of the following apply:

Your deed’s survivorship language is unclear or disputed.
There are multiple claimants to the surplus funds.
There are significant sums at stake or complex liens and mortgages involved.
You need to file a court petition or defend a claim in court.

Summary

A valid right of survivorship in a recorded deed can give the surviving owner a claim to the entire owner’s share of any surplus funds from a foreclosure — but success depends on the deed language, timing of events, lien priorities, and whether competing claims exist. Expect to produce documentary proof and, in many cases, to file a claim or appear in court to secure distribution. Because the details matter and Tennessee procedures can be technical, consult a Tennessee real property attorney if you plan to assert a survivorship claim to collect surplus funds.