Tax Delinquent Overages

This area of Tax Delinquent Sale Overbids derives from a Sheriff’s Sale or County Tax Foreclosure Sale

When a property is allowed to become delinquent beyond a certain time in paying the county property tax, most counties in the United States will attain control and may take possession of the property for the purpose of sellling it to acquire funds to pay the outstanding property taxes. When the property is purchased from the county by an investor, the price paid for the property is normally more than the county needs to make itself “whole” from the costs of the sale as well as the back taxes due. The amount of capital that is created by this situation is called by different names such as “excess proceeds, overage, overbid, or surplus funds” capital.

In the majority of states, the county is required to return this capital to the property owner from whom they took the property for the tax sale, but only if it is claimed within a certain time frame. If not claimed within the statutory claim period, the county is entitled to “escheat” those funds, which means the county can absorb those funds into its general budget and spend it on county matters.

Ownership of any Tax Sale overbid transfers from the individual owner to the county upon expiration of the state or county’s designated claim period. If the property sells only for the amount of the unpaid taxes and costs of holding the tax sale, then there is no “overbid” funds to which the previous owner would be entitled. But that situation occurs very rarely.