Texas surplus funds

In Texas, money left over from a tax sale is held by the district clerk of the court that ordered the sale. Former owners have two years from the sale to claim it by asking that court. After that, it goes to the taxing units that took part in the sale, such as the county, the city and the school district, and the owner can't get it back.

How excess proceeds are handled

• Notice: if the excess is more than $25, the clerk must send the former owner a written notice within 31 days of receiving it, with the amount and how to claim it.
• Holding period: the clerk keeps the money in the court's registry for two years after the sale, unless the court orders otherwise.
• If nobody claims it, the clerk pays it to each taxing unit in the sale, in proportion to the taxes they were owed.

How to claim: a petition to the court

The claim is a petition filed in the court that ordered the sale, before the second anniversary of the sale. It can be filed under the same case number as the tax suit; a new lawsuit isn't needed. A copy must be served on all parties to the tax suit at least 20 days before the hearing. At the hearing, the court orders who is paid, in this order:

1. the buyer, if the sale was later declared void;
2. taxing units, for taxes that came due after the judgment or were left out of it;
3. other lienholders, such as a mortgage lender, by their legal priority;
4. taxing units, for anything the judgment awarded that the sale didn't cover;
5. the former owners.

A former owner can claim if they were a defendant in the tax judgment, are related to such an owner within the third degree (for example a child, grandchild, parent, sibling, niece or nephew), or inherited that owner's interest by will or by law.

Only lawyers may charge to help

Texas strictly limits who can be paid to help, and how much:

• A person who is not an attorney may not charge a fee to obtain excess proceeds for an owner.
• An attorney's fee is capped at 25% of the amount obtained or $1,000, whichever is less.
• Buying an owner's claim is tightly limited. It can't happen until the 36th day after the money is deposited, can't result from an in-person or phone solicitation, must pay the owner at least 80% of the claim on the day, and needs a sworn statement from the owner. The buyer can recover no more than 125% of what they paid.

What to do

• If your Texas property was sold at a tax sale in the last two years, call the district clerk in that county and ask whether excess proceeds are in the court's registry, how much, and the case number.
• You don't need anyone's help to claim. If you'd like a lawyer, their fee is capped by law.
• Don't wait. After the second anniversary of the sale, the money goes to the taxing units.

Our free Texas claim kit walks through each step, with every county's district clerk phone number.