Tax Sale Overages vs Foreclosure Surplus Funds: Who Holds the Money and Who Can Claim It

Same name, two different sales

Search for surplus funds and you will find the same words used for two different things. Surplus funds, excess proceeds, excess funds and overages can all describe money left from a tax sale, and they can all describe money left from a mortgage foreclosure. The money behaves differently depending on which kind of sale produced it.

A tax sale happens when property taxes go unpaid. Depending on the state, the county sells a tax deed, auctions the property after a tax lien goes unredeemed, or runs a tax foreclosure. If the sale brings in more than the taxes, interest and costs, the extra is a tax sale overage.

A mortgage foreclosure happens when a home loan goes unpaid. The lender forecloses, through a court case or a trustee sale, and the property is auctioned. If the sale brings in more than the loan balance, interest and costs, the extra is foreclosure surplus.

For the basics of what overages are and who they belong to, see Overages Meaning. This article is about the differences.

The differences side by side

This table sums up the practical differences. Individual states vary, so treat it as a map, not a rulebook.

Who holds the money

Tax sale overages usually sit with the county office that held the sale. In Florida it is the clerk of court's tax deed unit. In Georgia it is the tax commissioner. In California it is the county treasurer-tax collector, and the board of supervisors decides claims. In Ohio, excess from a tax sale is deposited with the county and can be claimed for three years.

Foreclosure surplus usually sits in the court case. After a judicial foreclosure, the clerk of the court holds it until a claim is approved. In Ohio, the sheriff hands the balance to the clerk within 45 days of the sale being confirmed, and the clerk pays it on demand. After a trustee sale in a non-judicial state, the trustee pays it out or deposits it with a court when claims compete. In Colorado, the county public trustee holds a foreclosure overbid for six months before it goes to the state treasurer.

The office matters because it is the only one that can pay you, and each has its own forms.

Who comes first

In both kinds of sale, the owner is paid last. What changes is who stands in front.

After a tax sale, the taxes and costs come out of the sale price. From the surplus, government liens and other liens of record are usually paid next, in order of priority. In South Carolina, for example, the overage first goes to outstanding municipal tax liens on the property.

After a mortgage foreclosure, the foreclosing lender is paid from the sale price. From the surplus, anyone whose lien was wiped out by the foreclosure can claim first: a second mortgage or home equity line, a homeowners association, judgment creditors, and some government liens. Only then does the former owner receive what is left.

That is why a large surplus on a list does not always mean a large payment to the owner. Always check what is recorded against the property.

Fee rules for agents differ by sale type

Several states treat the two kinds of surplus differently when someone helps an owner for a fee.

• Florida. Foreclosure surplus: fees are capped at 12 percent, and the assignment must be filed with the court (Fla. Stat. 45.033). Tax deed surplus: we have not found a statutory cap.
• Colorado. Foreclosure overbids held by the public trustee: paid agreements are unenforceable, and inducing one is a misdemeanor (C.R.S. 38-38-111).
• Texas. Tax sale excess proceeds: only attorneys may charge a fee, capped at 25 percent or $1,000 (Tex. Tax Code 34.04(i)).
• Ohio. Neither the tax sale nor the foreclosure sections we read set a fee cap, but liens and judgments can be paid from the balance first.

For the full state table, see our recovery agent guide.

What the numbers look like

Foreclosure surplus tends to be larger because mortgages are usually a fraction of a home's value, while unpaid property taxes are a tiny fraction. In Florida, where we publish both kinds, the difference is clear.

Why investors should care about the difference

If you buy at tax deed sales or foreclosure auctions, the surplus is a direct result of your bid. Every dollar you bid above the opening amount becomes surplus that someone else can claim. Understanding where it goes helps in two ways.

First, it shows you how much equity is left in a property. A long surplus list in a county tells you that bidders there regularly pay well above the debt, which is useful when you set your maximum bid. Our bid calculator helps you set that number before the auction.

Second, in states that reformed their laws after the Supreme Court's 2023 Tyler v. Hennepin County decision, the rules on who keeps equity changed. That affects tax lien investors in states where the lien holder used to receive the whole property. Read the current statute before you bid, and see our state guides for each state's rules.

For former owners, the lesson is simpler: if your property sold at auction, check whether any bidder paid more than you owed, because that difference may be waiting for you.

How to tell which one you have

Look at the paperwork or the list entry.

• A tax deed number, certificate number or a sale run by the tax collector or tax commissioner means a tax sale.
• A civil case number with a lender as the plaintiff, or a notice of trustee's sale, means a mortgage foreclosure.
• In our records, every entry shows its sale type, and the record page shows the rules for that type in that state.

Once you know which kind you have, use the right guide: How to claim surplus funds after a foreclosure, or for Florida tax deeds, How to claim surplus funds in Florida.

Frequently Asked Questions

Common questions about tax sale overages and foreclosure surplus.