How can a former spouse or survivor assert entitlement to surplus funds following the owner’s death or divorce?

Detailed Answer

When a property sells under foreclosure or court order, any funds remaining after satisfying the primary debt, costs and junior liens become “surplus funds.” Under Utah law, former spouses and surviving spouses (or other heirs) may claim those funds by following defined procedures.

1. Identify the Sale Type

Utah recognizes two main sale types:

Nonjudicial sales: Conducted by a trustee under a deed of trust. Utah Code § 57-1-26 governs the sale and distribution of proceeds. (see Utah Code § 57-1-26).
Judicial sales: Ordered by a court (e.g., sheriff’s sale). Utah Code § 78B-6-1502 controls surplus distribution. (see Utah Code § 78B-6-1502).

2. Establish Your Legal Interest

Surviving spouse: If the property owner died before sale, surplus funds become estate assets. A surviving spouse can claim under probate by filing a notice of claim:

Intestate spouse’s statutory share: see Utah Code § 75-2-201.
Family allowance: short-term support from the estate under Utah Code § 75-2-402.

Former spouse: If a divorce decree reserved a claim to proceeds or equity, the former spouse retains a lien or equitable interest. Review your divorce judgment for language that:

Awards you a portion of sale proceeds.
Reserves jurisdiction to allocate surplus funds.

3. File a Claim for Surplus Funds

Obtain official documents: mistrustee’s notice of surplus, certified divorce decree or death certificate, marriage certificate, probate documents or letters of administration.
Prepare an Application for Distribution of Surplus Funds. Utah courts accept a standard form in foreclosure matters. Attach proof of your interest.
Serve the trustee or court clerk and all interested parties (junior lienholders and the estate’s personal representative).
File the application within the statutory deadline. Under nonjudicial sale rules, claimants must submit within 90 days after the trustee’s record of sale. (Utah Code § 57-1-26(4)). For judicial sales, check the court’s published deadline or see Utah Code § 78B-6-1502.
Attend any hearing. The court or trustee will verify claims, resolve competing interests and issue an order directing payment.

4. Collect and Distribute Funds

Once the court or trustee approves your application, it will issue a check. If multiple claimants exist, the court prioritizes under statute:

Senior liens and legal costs.
Junior lienholders by recorded priority.
Surviving or former spouse (if a valid claim exists).
Estate heirs or the original property owner.

Helpful Hints

Act quickly. Courts enforce strict deadlines for surplus-fund claims.
Get certified copies of all decree or probate documents.
Consult the trustee’s or court clerk’s office for local filing rules.
Prepare to attend a hearing. Bring original documents and copies for all parties.
If you face competing claims, consider mediation or legal representation.