Tax sale excess proceeds

The two-year clock

This is the single most important fact on this page. Texas excess proceeds from a tax sale generally must be claimed by petition to the court within two years of the date of the sale. After that, the funds are distributed to the taxing units and are no longer recoverable by the former owner.

There is no extension for not having been told, and notice — where it goes out — goes to the address of the property that was just sold. If your property went to a tax sale in the last two years, treat this as time-sensitive.

How a tax sale produces excess

The judgment is for delinquent taxes, penalties, interest and costs — a figure that is usually a fraction of what the property is worth. The sale is a public auction. Bidders competing over real estate worth many times the tax bill routinely drive the price well past the judgment.

Everything above the judgment and the costs of the sale is excess, and it is held for the parties with an interest in the property at the time of the sale.

Who can claim it

• The former owner of the property
• The estate and heirs of a former owner who has died
• Each co-owner, to the extent of their interest
• Lienholders whose liens were extinguished by the sale, in the order the statute sets out

Texas also caps what an assignee, transferee, or attorney-in-fact may be compensated for pursuing an excess-proceeds claim on someone else's behalf — a consumer protection that exists precisely because this space attracts predatory operators. Any fee we quote on a tax-sale file complies with it, and it is in your agreement in writing.

What the claim looks like

It is a petition filed in the court that ordered the sale, identifying the claimant, establishing their interest in the property as of the sale date, and asking the court to order the clerk to release the funds. Notice goes to the other potential claimants. There is a hearing.

Proof of identity and of the chain of ownership carries the file. Where the owner has died, the heirship record is what carries it, and that record has to be built correctly the first time.

Redemption is a different thing

Texas gives certain former owners a right to redeem the property after a tax sale — to buy it back within a set period on statutory terms. That is separate from claiming excess proceeds, and the two can interact. If you are inside a redemption period and considering it, say so at the review; it changes the advice.