Detailed Answer
This answer explains, in plain language, the usual process for recovering surplus funds when real property in Maine is sold at a tax sale. “Surplus funds” (sometimes called “excess proceeds”) are the money remaining after the sale proceeds have paid the delinquent taxes, interest, penalties, administrative costs, and any other statutory liens that take priority.
What typically happens at a tax sale
When a municipality sells property to satisfy unpaid property taxes, the town or municipal tax collector conducts (or directs) the sale under Maine’s property tax statutes (see Maine Revised Statutes, Title 36: Taxation). After the sale, the municipality must apply the sale proceeds in this general order: accrued taxes, interest, costs of collection and sale, and then other liens or charges that have legal priority. Any remaining money after those payments is the surplus.
Who can claim the surplus?
People or entities who commonly have a right to the surplus include:
- The former record owner(s) of the property at the time of the tax sale (or their heirs or personal representatives).
- Mortgagees, judgment lienholders, or other parties who held recorded liens that remained after priority tax liens were paid.
- Any other party with a legally recognized claim to the equity in the property (for example, co-owners).
How to recover surplus funds — typical step-by-step process
- Confirm that a surplus exists. Ask the municipal tax collector or treasurer for a written accounting of the sale: gross sale price, amounts applied to taxes, interest, costs, and any payments to lienholders. This accounting will show whether a surplus remains.
- Contact the municipal office right away. Municipalities usually hold surplus proceeds and maintain instructions for making a claim. The municipal treasurer or tax collector can explain the local paper-work, forms, and proof the municipality requires.
- Gather proof of your claim. Typical documents include a government photo ID, a deed or recorded document showing ownership, a death certificate and letters testamentary or administration if you are an heir or personal representative, mortgage or lien documents, and any payoff statements or lien release documents. Clear proof of identity and your legal interest in the property will speed the process.
- File a written claim or application. Many municipalities require a written claim form or affidavit plus copies of supporting documents. Submit your claim to the municipal treasurer or other designated official. Keep copies and obtain a dated receipt.
- If the municipality approves, it will issue payment. Once the municipality verifies the claim and clears any competing claims, it typically issues a check for the claimant’s share of the surplus.
- If there are competing claims or a dispute, you may need to seek judicial relief. When two or more parties claim the same surplus, or when the municipality declines your claim, the claimant often must bring a civil action in Maine courts (for example, a request to the Superior Court) to determine entitlement. Courts can direct distribution of the funds and resolve priority disputes.
Example illustrating recovery of surplus funds
Hypothetical: A property sells at a tax sale for $150,000. The municipality applies $25,000 for unpaid taxes, $3,000 in interest and penalties, and $2,000 in sale costs. A mortgage holder with a $20,000 junior lien presents a valid recorded lien. After paying the taxes, interest, costs, and the mortgage where appropriate, $100,000 remains as surplus. The former owner provides proof of ownership and identity; the mortgage holder proves its lien. The municipality or a court determines how much each claimant receives based on legal priority and valid claims.
Where the law is found
The procedures for tax liens and sale of property for taxes in Maine are governed by the Maine Revised Statutes (Title 36: Taxation). For the statutory scheme and detailed procedural provisions, see the Maine Revised Statutes: Title 36 (Taxation): https://legislature.maine.gov/statutes/36
Practical timing and deadlines
Time limits and required steps vary. Some municipalities require prompt filing of claims. If you delay, you risk forfeiting rights or running into administrative or statutory deadlines. If funds are contested, the court process will add time. Contact the municipal treasurer promptly, and consider consulting an attorney if you confront obstacles.
When you should get an attorney
Consider hiring a lawyer if:
- Multiple parties claim the same surplus.
- The municipality denies your claim or refuses to provide accounting.
- Large sums are at stake or the chain of title is unclear.
- You need help preparing or filing a court action to resolve competing claims.
An attorney can help locate the correct documents, prepare evidence, and, if necessary, file a court action to enforce your rights.
Disclaimer: This article explains general Maine law concepts and common steps for recovering surplus funds after a tax sale. It is for informational purposes only and does not constitute legal advice. It does not create an attorney-client relationship. For legal advice tailored to your situation, consult a licensed Maine attorney.
Helpful Hints
- Contact the municipal tax collector or treasurer first — they hold the accounting and can tell you whether surplus exists.
- Bring clear identity and title documents: recorded deed, mortgage records, death certificate and probate papers if you are an heir or representative.
- Get everything in writing. Ask for a written accounting of the sale and a receipt when you submit a claim.
- Act quickly. Administrative windows and practical obstacles can make recovering surplus harder over time.
- If the municipality says the funds are disputed or refuses your claim, ask for written reasons and consider consulting a lawyer to protect your rights in court.
- Search recorded land records and municipal files before you claim — confirming the chain of title and any recorded liens helps your credibility and speeds payment.
- When in doubt, consult a Maine-licensed attorney familiar with tax sale and property title law before you sign or accept any distribution.