Understanding Tax Sale Surplus

When a property is sold at a tax sale due to unpaid property taxes, the proceeds from the sale are used to cover the delinquent taxes, penalties, and associated costs. However, in many cases, the sale generates more money than what is owed. This excess amount is known as the tax sale surplus or overage funds. For years, these surplus funds were often kept by counties, leaving former property owners unaware that they were entitled to this money. However, recent legal developments have changed the landscape somewhat, by defining very clearly and legally that these funds rightfully belong to the former deedholders.

*** The Shift in Policy: A Win for Property Owners***

Before 2020, it was common practice for counties to retain surplus funds from tax sales unless the former property owner actively filed a claim. This practice was not only unfair but also legally questionable. Several court cases across the United States challenged this system, leading to significant rulings that affirmed the rights of property owners.

One notable example is the 2020 case in Indiana, Tyler v. Hennepin County, where the court ruled that retaining surplus funds without notifying the former property owner was unlawful. The court emphasized that the surplus funds are the property of the deedholder, and counties have no moral or legal right to keep them unless the owner fails to claim them within the allotted time.

As a result of such rulings, counties are now required to notify former deedholders about the availability of surplus funds. However, the notification process is often minimal, counties are typically only required to send one letter to the last known address of the property owner. Given that many people move or change addresses over time, this single notification can easily go unnoticed, leaving many unaware of their rightful claim.

***How Difficult is it to Claim Surplus Funds?***

While the law now requires counties to notify property owners of surplus funds, the process of claiming these funds is often cumbersome and confusing. Counties may use complicated paperwork, strict deadlines, and vague instructions to discourage claims. After all, surplus funds represent a potential source of revenue for counties, and they have little incentive to make the process easy.

This is why it’s crucial for property owners to act promptly and diligently if they believe they are entitled to surplus funds. Waiting too long or missing a deadline can result in the county keeping the money permanently.

*** Why You Should Consider Professional Assistance***

Navigating the process of claiming surplus funds can be challenging, especially if you’re unfamiliar with the legal and bureaucratic requirements. This is where professional assistance can make all the difference. Professionals who specialize in recovering surplus funds understand the intricacies of the system and know how to maneuver through the county’s red tape. They can help you:

• - Locate surplus funds you may not even know exist.

• - File the necessary paperwork correctly and on time.

• - Follow up with county offices to ensure your claim is processed.

While it may seem like an added expense, hiring a professional can significantly increase your chances of successfully recovering your funds. Most professionals cover any out-of-pocket expenses that may arise. There are many situations where an attorney needs to get involved, tax surplus professionals usually have relationships with local attorneys that have agreed to work the claim on a contingency basis. Which means, they only get paid, if you get paid.

***Surplus Funds Belong to You—Don’t Let the Local Government Keep What’s Yours***

It’s important to remember that surplus funds from a tax sale are your property. Counties have no moral or legal right to keep the investment you have paid for, for as long as 3 decades in some cases. If you’ve lost a property to a tax sale, it’s worth investigating whether surplus funds are available.

If you suspect you may be entitled to surplus funds, don’t wait—take action. Reach out to a professional who can guide you through the process and help you reclaim what’s rightfully yours. After all, these funds could provide much-needed financial relief or even a fresh start.

The system may not be designed in your favor, but with the right knowledge and support, you can level the playing field and ensure that your property rights are protected.

**Understanding Real Estate

Tax Sale Surplus Funds:

What You Need to Know**