Recovering Surplus Proceeds After a Tax-Related Sale in Hawaii

Quick summary: When a property in Hawaii is sold to satisfy delinquent taxes, sale proceeds first pay the tax debt, interest, penalties, and the costs of sale. If money remains after those payments, those remaining funds (the surplus) may belong to the former owner or other parties with valid claims. Recovering the surplus requires identifying the surplus, proving your claim, and following the county or court process to get the funds released.

Detailed answer — how surplus recovery works in Hawaii

Step 1 — Confirm whether surplus exists and who handled the sale

First, confirm whether the sale produced surplus funds. Contact the county agency that conducted the tax sale (often the county tax collector, treasurer, or director of finance) or the circuit court if the sale was through a judicial foreclosure. Ask for a written accounting showing the sale price, amounts applied to taxes, penalties, interest, fees, and any liens paid. The county or court should be able to tell you whether a surplus exists and the amount.

Step 2 — Understand who can claim the surplus

Generally, proceeds from a tax sale are applied in this order: (1) costs of the sale and collection, (2) unpaid taxes, penalties, and interest, and (3) holders of recorded liens or encumbrances to the extent the law and the sale order permit. Any remaining funds typically belong to the record owner at the time of sale (or to that owner’s heirs or legal representatives). Other parties (for example, junior lienholders) may have competing claims if their liens were not fully satisfied by the sale proceeds.

Step 3 — File the proper claim or petition

Who you file with depends on how the sale was conducted. If the county handled the sale administratively, the county will have a procedure to request payment of surplus funds. If the sale occurred through a court-ordered foreclosure, you will likely need to file a petition or motion in that court asking for distribution of surplus funds and attaching proof of your claim. In either situation, prepare to provide:

Proof of identity (government ID).
Documentation showing your interest in the property (deed, title report, mortgage, assignment documents, probate papers if claiming as an heir or personal representative).
Records of the tax sale and an accounting of the sale proceeds (from the county or court).

Step 4 — Priority disputes and contested claims

If multiple parties claim the surplus (for example, the former owner and a junior mortgage holder), the county or court will determine priorities and distribute funds accordingly. That process may require a hearing where you present evidence of your entitlement. If you lose, you may have appeal rights, but appeals have strict deadlines and procedural requirements.

Step 5 — Timing and deadlines

Statutes and local rules can impose time limits for making a claim or for the county to distribute funds. Act quickly after learning of a tax sale or potential surplus. Contact the county office or review the applicable Hawaii statutes and local rules for deadlines that apply to your county and the type of sale (administrative tax sale versus judicial foreclosure). For statutory language related to tax liens, collections, and tax sales in Hawaii, see the Hawaii Revised Statutes, chapter concerning property taxation and tax collections: Hawaii Revised Statutes – Chapter 247.

Common scenarios and how they affect recovery

Owner still alive and located: The former owner can usually claim surplus directly by filing the required forms and proof with the county or court.

Owner deceased: Heirs or the personal representative of the estate must show probate or letters testamentary, or other lawful proof of authority to claim the surplus.

Mortgage or lienholders: If a mortgage or other lien was recorded before the tax lien and the sale did not satisfy that lien in full, the lienholder may claim part of the surplus. Priority disputes are resolved under recording statutes and the sale order.

Practical steps to take now

Contact the county tax office or the court that handled the sale and request a written accounting and information about the surplus procedure.
Gather proof of ownership or other legal interest (deed, title report, probate documents, government ID).
If you find a surplus, follow the county’s claim form process or file the petition required by the court. Keep copies of everything.
If your claim is challenged, be prepared to participate in a hearing and present documentary evidence.
Get legal help if the surplus is significant, if there are competing claims, or if you are unsure how to proceed.

How professionals can help

A real estate attorney or title company can help locate sale records, confirm whether surplus exists, prepare and file a claim, and represent you at hearings. If the prior owner is deceased, an attorney can advise how probate or estate administration affects your right to claim the surplus. If cost is a concern, check for local legal aid programs and fee-limited clinics in Hawaii.

Disclaimer

This article is for general informational purposes only and is not legal advice. It does not create an attorney-client relationship. Laws and procedures change and vary by county. For advice specific to your situation, consult a licensed attorney in Hawaii.

Helpful Links

Hawaii Revised Statutes — Chapter 247 (property tax and tax collection provisions)
Contact your county tax collector or treasurer’s office (search your county’s official website for tax sale procedures).
Hawaii legal services and clinics — search online for statewide legal aid programs for low- and moderate-income residents.

Helpful Hints

Act quickly. Administrative and court deadlines can prevent recovery if you wait too long.
Get written documentation from the county or court showing the sale accounting and the existence/amount of any surplus.
Collect proof of your interest in the property before filing a claim (deed, mortgage, probate papers, ID).
If the owner is deceased, obtain certified copies of probate documents or a small-estate affidavit as required.
Keep careful records of all communications and filings; they can be crucial if the claim is contested.
If multiple claimants exist, expect a court hearing to resolve priorities. Professional representation helps in contested matters.
Even if the surplus is modest, missing it can mean permanently losing funds you are entitled to—don’t assume there’s no money without checking the official accounting.