Tax sale surplus and its deadlines

The money is yours by law

In Tyler v. Hennepin County (2023), the U.S. Supreme Court ruled unanimously that a county that sells a home for unpaid taxes cannot keep the money above the debt. Keeping it can be a taking of the owner’s property. States can still set the procedures and deadlines for claiming it, and they do, so the same right works very differently from one state to the next.

Who holds it

• Texas: the clerk of the court that ordered the sale, in the court’s registry.
• Florida: the county Clerk of the Circuit Court for the first 120 days, then the state’s Division of Unclaimed Property.
• California: the county, in its tax sale trust fund.
• Georgia: the county officer who ran the sale, such as the tax commissioner or sheriff, for five years, then the Department of Revenue.
• Michigan: usually the county treasurer.
• Ohio: the clerk of courts, then the county treasurer.

How long you have

• Michigan: a notice of intention to claim is due by July 1 after the foreclosure, and a court motion follows. Miss the notice and the claim is gone.
• California: one year from the day the tax deed is recorded.
• Texas: before the second anniversary of the sale.
• Ohio: 90 days at the clerk after the final notice, then three years at the county treasurer.
• Florida: 120 days after the clerk’s notice for everyone except the owner. The former owner is never time-barred.
• Georgia: no deadline while the county holds it. After five years it moves to the state and can still be claimed.

How a claim is made

In California it is a claim filed with the county, with no lawsuit. In Florida it is a written claim on the clerk’s own form. In Texas, Michigan and Ohio it runs through the court: a petition or motion, notice to the other parties and an order from a judge. Almost everywhere you will need proof of who you are and proof that you owned the property.

Who is paid first

Recorded lienholders are usually paid before the former owner, in an order set by state law, and the county’s own costs can come off the top. In Michigan, for instance, the amount that can be claimed is the sale price minus the minimum bid, county fees and a 5 percent sale commission. That is why the check can be smaller than the surplus first reported.

Fees, and selling your claim

• Texas: a person who is not an attorney may not charge the owner any fee, and an attorney’s fee is capped at 25 percent or $1,000, whichever is less.
• Michigan: the right to the money cannot be sold or assigned. A company can only be hired while you stay the claimant.
• California: no cap, but anyone filing for you must show you were told the amount, where it came from, and that you could file with the county yourself for free.
• Florida and Georgia: no cap while the county holds the money, and a 30 percent cap once it reaches the state.

Buying the property back is different

Redemption, buying the property back, has its own clock, and in many states it ends before the money is ever set aside. In Michigan and California it ends before the auction. In Georgia the owner can redeem for at least 12 months after the sale, and a homestead in Texas can be redeemed for two years after the buyer’s deed is recorded. A redemption undoes the sale, and the surplus with it.

Filing it yourself

Owners can file their own claims in each of these states, and some counties publish free forms. A simple claim with one owner is often manageable on your own. Several owners, heirs or competing liens are where help saves time and mistakes. In Georgia and Ohio, only you or a licensed attorney can file the claim.