What Happens to Excess Funds After a Tax Foreclosure Sale?

Do you pay your property taxes on time, every time?

If you don’t, then the Texas Tax Code (Section 34) allows taxing entities (county, city, school, etc.) to sell the property to regain your unpaid tax. But it’s unlikely that the tax you owe is equivalent to the amount investors will pay at auction.

What happens to the extra money from the sale?

The tax foreclosure excess funds remain with the agency that sold your property. To get them back, you must petition the agency in court.
Here’s what you need to know about accessing excess funds from your tax foreclosure sale.

 Let’s say you owe $16,000 in property taxes to the county. You can’t pay, so the county sells your property in its annual tax sale. When the county sells the property, it only needs to generate the $16,000 in due tax. Anything on top of that is of no real concern for the county. That means if your house is worth $150,000, the county can sell it for $20,000 if that’s the top offer they get. Why don’t they make an effort of turning a profit? First, it’s not their role – and investors who use these auctions go for cheap properties. Second, the extra funds (or surplus/ overages) belong to the last owner of the property before sale, which is you.

Claim Any Excess Funds Within Two Years of a Tax Foreclosure

The tricky part of the notice is that you only have two years to respond and initiate the claim in court.

If you don’t respond, the county (or tax authority) keeps your excess permanently (unless you get a court order).

Why is this a problem? Because many people don’t realize they can claim back the excess, and by the time they understand what happened, the clock has run out.

Even once you initiate your claim, it can take years for the process to play out, unless you hire a lawyer to represent you.

Do You Have a Right to Excess Funds?

If the county sold your house to recover back taxes and the sale generated excess funds over $25, then you have two years to claim the money.

"In this economy," . . . hiring an experienced attorney is simply invaluable when rebuilding in the aftermath of foreclosure.

Unanticipated legal issues require careful handling by a team of experts. Get in touch today through our online submission form to see whether Manfred Sternberg and Associates can help you and your family avoid further losses at this critical moment.