Tax Overages

Are you curious about how to claim tax sale overages? Is there money owed to you by the county?

All information about tax liens, tax deeds, and tax overages can be found in county records, often referred to as public records.

What Are Tax Sale Overages?

 

Before we discuss how to claim tax sale overages, let’s first define what overages are. In most tax defaulted auctions, overages occur when properties are sold for more than the owed back taxes. 

To begin, obtain a list of property owners who forfeited their property due to nonpayment of taxes. These properties may have sold for amounts exceeding the delinquent taxes, resulting in overages.

Tax Delinquent Property Auctions

What happened? The property owner failed to pay the required property taxes. In every state, the legislature mandates that property owners must pay their fair share of budgeted property taxes.

The legislature empowers the county board of supervisors or county commissioners to assess, levy, and collect taxes.

When property taxes go unpaid, the treasurer is authorized to seize the real estate. The county then announces a tax defaulted property auction, which is advertised online on the county website and in the local newspaper. These tax delinquent property auctions are open to the public.

 

Calculating Tax Sale Overages

How do you calculate tax overages?

For example, suppose a property’s assessed value is $75,000. The bidding at the auction starts at the amount of the back taxes, which is $5,000. However, aggressive bidders push the auction sales price up to $45,000.

All $45,000 is paid to the treasurer at the auction, yet the unpaid taxes were only $5,000. Therefore, the overage is $40,000.

So, the county sold the property at auction and received $45,000, which more than covered the taxes, leaving a $40,000 overage with the treasurer.

Claiming Tax Sale Overages

The county’s responsibility is to seize the property, resell it to the highest bidder, and use the proceeds to pay off the delinquent taxes. Any funds received in excess of the delinquent taxes belong to the property owner.

If the property owner fails to come forward to collect the $40,000 overage from the example, it remains with the county.

The county will hold the funds, and if no one makes a claim, the money will eventually escheat to the state, meaning it will be confiscated and lost to the property owner.

To claim the tax sale overage, the property owner must contact the county and follow the county’s process for claiming an overage.

 

Conclusion

Tax sale overages occur when a county seizes real estate for unpaid property taxes and sells it at auction. If the auction price exceeds the amount owed in back taxes, the surplus is known as an overage.

Who has rights to the overage? The property owner who lost the property does.

However, property owners may not always be aware of this, and county officials do not always proactively notify them. If the owner does not claim the funds, they revert to the county.

To claim tax sale overages, the property owner must contact the county to initiate the claim process.

Some investors have built businesses around notifying property owners of these owed amounts in exchange for a finder’s fee.

All relevant information is publicly available in records, though it’s crucial to understand the statutes and follow proper procedures.

 

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