Pennsylvania Excess Funds: How Tax Sale Surplus Claims Work Under the Real Estate Tax Sale Law

How Pennsylvania tax sales create excess funds

Outside Philadelphia and Pittsburgh, Pennsylvania counties collect delinquent property taxes through a tax claim bureau under the Real Estate Tax Sale Law of 1947. Unpaid taxes become a claim, and if they stay unpaid, the bureau sells the property.

• Upset sale. The first sale, usually held once a year, often in September. The opening bid, the upset price, covers the taxes, municipal claims and costs. Liens and mortgages generally stay on the property.
• Judicial sale. If the property does not sell at the upset sale, the bureau can ask the court for a judicial sale, which clears most liens.
• Repository. Property that still does not sell goes into a repository for unsold property and can be bought later.

Whenever a bid goes above what is owed, the extra is excess funds. Our Pennsylvania surplus funds list collects the bureau lists we can load, often published as overbid reports or unclaimed surplus lists.

Who is paid, and in what order

Section 205(d) tells the bureau exactly how to divide the money from a tax sale, after its authorized costs:

• First, the Commonwealth, for state tax liens included in the price or when the property is sold at judicial sale.
• Second, the taxing districts, in proportion to the taxes due them.
• Third, taxing districts or municipal authorities, for municipal claims such as water and sewer.
• Fourth, mortgagees and other lienholders, in order of priority, as they appear of record, whether or not the sale discharged their lien.
• Fifth, the owner of the property.

That fourth step matters. At an upset sale, mortgages usually survive the sale, and the mortgage lender is still paid from the excess funds. So a home with a mortgage that sold at upset sale may leave little or nothing for the owner, even when the overbid looks large.

The court's schedule of distribution

Pennsylvania adds a court step most states do not have. Before it pays anyone, the bureau must file a petition in the court of common pleas asking the court to confirm a proposed schedule of distribution for each account (section 205(e)).

The court issues a rule to show cause, and the bureau mails a copy to every person on the schedule and to the buyer, at the last address it knows. If nobody responds by the return date, the court confirms the distribution absolutely. If someone objects, the judge hears the objection, adjusts the schedule as the law requires, and then confirms it. Once confirmed, the distribution is final and cannot be appealed by anyone listed in the petition.

In practice, that means two things. First, if you get a rule to show cause, read it. It is your chance to object if the schedule leaves you out or pays the wrong person. Second, some counties publish the proposed schedule itself, which is how our list shows the expected payee for some records.

How to claim Pennsylvania excess funds, step by step

1. Find the record. Check the tax claim bureau's excess funds, overbid or unclaimed surplus list for the county where the property was sold, or our Pennsylvania list. Note the sale date and the parcel or account number.

2. Contact the bureau. Ask whether a schedule of distribution has been confirmed and what balance is due the owner after liens.

3. Use the county's claim procedure. Counties differ. Some use a notarized claim form; others, such as Lancaster, ask legal representatives to petition the court of common pleas.

4. Prove your right to the money. Expect government ID and proof you were the owner of record at the time of the sale. For an estate, bring letters testamentary or letters of administration.

5. Watch the three-year limit. Section 205(f) gives the owner three years from the date of the sale to present a claim. File well before the end, because court steps take time.

The three-year deadline

Section 205(f) is short and strict. If no claim for the balance due the owner is presented by or on behalf of the owner within three years of the date of the sale, the balance goes to the taxing districts, divided by their millage in the year the property was sold. Any interest the money earned during those three years stays with the county.

There is no step where the money moves to a state unclaimed property account in the owner's name. Once the three years run, the owner's claim against the bureau is over. That is why several Pennsylvania counties publish "three-year unclaimed" lists. They are the last chance before the money is distributed.

Philadelphia and Allegheny County

Philadelphia and Allegheny County (Pittsburgh) work differently. Much of their tax-delinquent property is sold at sheriff's sales under other laws, such as the Municipal Claims and Tax Liens Act, rather than by a tax claim bureau upset sale. After a sheriff's sale, the sheriff prepares a schedule of distribution, and the court rules decide who is paid.

The principle is the same, liens first and owner last, but the office, the forms and the deadlines are not. For a Philadelphia or Allegheny property, start with the sheriff's office or the court's prothonotary, not a tax claim bureau.

We track 523 Allegheny County records from the sheriff's office, with a median of $2,618. We do not yet track Philadelphia.

What Pennsylvania excess funds look like right now

TaxLienSimple tracks 1,157 Pennsylvania excess funds records across 20 counties, totaling about $20.8 million. The median record is $4,217, and 395 records (34%) are above $10,000.

Berks has 90 records with a median of $9,367. Bucks has 41 with a median of $14,214. Erie has 54, and Lehigh has 44 with a median of $7,488.

Mistakes that cost Pennsylvania claimants money

Ignoring the rule to show cause. It is the notice that the court is about to confirm who gets paid. Once confirmed, the distribution is final.

Forgetting the mortgage. Section 205 pays mortgage holders before the owner, even when the upset sale left the mortgage on the property.

Waiting past three years. After that, the money goes to the taxing districts, not to a state account in your name.

Going to the wrong office. In Philadelphia and Allegheny, many sales are sheriff's sales, so the tax claim bureau process does not apply.

Signing before you know the balance. Ask the bureau what is due the owner after liens before you agree to pay anyone a share.

Frequently Asked Questions

Common questions about Pennsylvania tax sale excess funds.