Detailed Answer

Short answer: If a county tax sale produces more money than the taxes, interest, penalties and costs owed, the excess (the “surplus”) can usually be claimed by the former owner or other parties with a legal interest (mortgagees, judgment lienholders, etc.). In Iowa, the typical path is: identify the surplus, notify or file a claim with the county office that conducted the sale (usually the county treasurer or county auditor), provide proof of your interest, and wait for the county to disburse the funds or for a court to resolve competing claims. The exact priority of claims, deadlines, and procedures are governed by Iowa law and county practice.

How a surplus can arise

When a property is sold for unpaid property taxes, the sale must cover the taxes, interest, penalties and the costs of sale. If the sale price exceeds those amounts, the amount left over is the surplus or overage. The surplus does not belong to the purchaser; it is reserved for people who had prior legal interests in the property.

Who may claim the surplus

The former property owner (the person who lost the property).
Secured creditors recorded before the tax lien (e.g., mortgagees) and certain lienholders.
Other parties who can prove a legal interest (for example, a judgment creditor whose judgment attached before the tax sale in some situations).

Typical step-by-step process in Iowa

Confirm a surplus exists. Check the county records or contact the county treasurer or county auditor where the sale occurred to learn whether the sale produced surplus funds and the amount.
Identify who has priority. Under Iowa law and the order of recorded interests, certain creditors and the former owner generally have priority. The county will follow statutory priority when distributing funds.
File a formal claim or application. The county will have a required form or procedure for claiming surplus funds. You will usually need to submit a written claim to the county treasurer or auditor along with supporting documents: proof of identity, recorded deed or mortgage, judgment documents, tax sale certificate or sale information, and any other documents showing your interest.
Provide evidence and documentation. Typical documents include certified copies of deeds, mortgages, recorded lien instruments, court judgments, and government-issued photo ID. If you are an attorney or representative, counties will usually require a signed authorization or power of attorney.
County review and payment or contest. The county will review the claim, verify priorities and amounts, and either disburse funds or notify competing claimants. If there are competing claims or the county is unsure who is entitled, the county may hold the funds until a court orders distribution.
If your claim is denied or contested, go to court. A denied or disputed claim can be litigated in the appropriate Iowa court. Courts determine competing claims and order distribution according to statute and equity.

Important Iowa legal references and where to look

Iowa’s rules about tax sales and related distribution procedures are found in the Iowa Code chapters that govern tax sale procedures and lien priorities. For the exact statutory language and specific procedures, consult the Iowa Code and county guidance. See the Iowa Legislature site for the code: https://www.legis.iowa.gov. Relevant chapters to review include the chapters on tax sale procedures and enforcement; you can search the Code for terms like “tax sale,” “surplus,” and “tax deed.”

When you will need an attorney

Common reasons to consult an attorney include:

Competing claims to the surplus funds.
Disagreement with the county’s determination of priority or amount payable.
Difficulty proving your interest (missing documents or complex title history).
Time-sensitive deadlines where a missed filing could forfeit your claim.

Hypothetical example

Suppose a property sells at a county tax sale for $150,000. The taxes, interest, penalties and sale costs total $40,000. That leaves a surplus of $110,000. The county notifies interested parties and accepts claims. The recorded mortgage holder from before the tax lien submits its mortgage documents and claims its share under priority rules; the former owner also files a claim. The county reviews records and distributes the surplus in the order required by law, or—if the parties dispute priority—the county holds the funds until a court decides.

What to expect on timing and fees

Counties may take several weeks to review claims. There may be administrative fees for processing the claim or for obtaining certified copies of documents. If the matter is contested and goes to court, expect additional time and costs for litigation.

Key takeaways

If a surplus exists after a tax sale in Iowa, the former owner and prior lienholders are the primary potential claimants.
Act promptly: contact the county treasurer or auditor, learn their required claim procedure, and gather certified documents to prove your interest.
If the county denies your claim or multiple parties claim the same funds, an Iowa court may need to resolve competing claims.
Because procedures and timelines can be technical, consider legal help when claims are contested or complex.

Statute references: See the Iowa Code and use the Iowa Legislature site to locate the tax-sale and lien-priority chapters and sections that apply to your situation: https://www.legis.iowa.gov. County offices (county treasurer and county auditor) are the practical starting point for locating surplus funds.

Disclaimer: This article is educational only and is not legal advice. Laws change and facts matter. If you have a specific dispute or a significant amount of surplus at stake, consult a licensed Iowa attorney or the county office where the sale occurred.

Helpful Hints

Contact the county treasurer or county auditor first—county staff can confirm whether a surplus exists and explain local claim forms.
Gather certified copies of deeds, mortgages, liens, judgments and photo ID before submitting a claim.
Keep records of all communications with the county and any filings you make.
If you are a lienholder, check your recording dates: priority often depends on the date your lien was recorded.
If multiple parties claim the same funds, expect delays and consider hiring an attorney experienced in Iowa tax-sale and title matters.
Ask the county whether there are administrative fees and what proof is required for reimbursement of costs before distribution.
Search the Iowa Code on the Iowa Legislature website for precise statutory language governing tax sales and surplus distributions: https://www.legis.iowa.gov