Minnesota Grandmother Takes County to U.S. Supreme Court Over Excess Proceeds from a Foreclosure Sale

Going through a foreclosure on your property is never an easy matter. If you’re in default, a lien holder, like your mortgage company or a mechanic’s lien holder, can sometimes force the sale of your property to recover their money. But in Texas, we take for granted that the lien holder can only recover the amount of their lien plus the costs of foreclosure and the sale. Under Texas law, you can recover any excess funds by petitioning the court or the trustee. However, there are 12 states in the U.S. where this isn’t the case. A woman in Minnesota recently took the fight to keep the excess proceeds from her foreclosed property  to the U.S. Supreme Court . 

Unpaid Real Estate Taxes in Minneapolis

Grandmother Geraldine Tyler owned an apartment in Minneapolis, Minnesota, and dutifully paid her property taxes for years. But she fell behind on her bills when she moved to a senior center and a safer neighborhood across town. By 2015, Ms. Tyler owed $2,311 in unpaid property taxes. When the city added penalties, fees, and interest, she owed almost $13,000.

Hennepin County seized Ms. Tyler’s condo and sold it for $40,000. But rather than keep the $13,000 she owed plus $2,000 for costs and return the rest to Ms. Tyler, the county kept the entire $40,000. In Minnesota, the law allows a local government to take “absolute title” when they seize a property, meaning Ms. Tyler wasn’t entitled to recover any of the excess proceeds of the sale.

On April 26, 2023, the  U.S. Supreme Court  heard Ms. Tyler’s case. The Pacific Legal Foundation, the nonprofit representing Ms. Tyler, called Minnesota’s practice “an egregious violation of fundamental property rights.” But 11 other states also allow local governments to keep the entire amount gained from a foreclosure sale. For now, this remains a legal practice.

Texas Law on Excess Proceeds

Fortunately, under Texas law, a lien holder who forces the sale of a property can only keep the value of the lien on the property plus any costs of foreclosing and selling the property. The former property owner is then entitled to petition the court or a trustee for the excess proceeds within two years of the foreclosure sale date.

Hire an Experienced Surplus Funds Recovery Attorney

If you’re facing a foreclosure, it’s important to understand your rights and how to recover any excess proceeds from the sale. But the system doesn’t make it easy to figure out what to do and when. An experienced attorney can help you recover the money quickly and efficiently. The skilled attorneys at Manfred Law can help. Call them at (713) 547-5460 or  contact them online  to schedule your consultation.