Detailed Answer
Short answer: If a Maryland property is sold at a tax sale and the sale produces more money than is needed to pay the taxes, interest, penalties, and the sale costs, the excess (the “surplus”) generally belongs to the former owner or other persons with a legal claim (for example, holders of certain liens). Recovering that surplus usually requires filing a claim with the county or the circuit court and proving your entitlement. The exact steps, forms, deadlines, and where funds are held vary by county, so act quickly and check local procedures.
How surplus arises and who has priority
When the county sells real property to collect unpaid taxes, the sale proceeds pay: (1) the unpaid property taxes and related interest/penalties; (2) the costs of the sale; and (3) any valid tax sale certificate purchaser’s claim (if applicable). Any remaining money is the surplus. Priority for that money typically follows statutory and lien-priority rules: the former owner (or the owner’s successor in interest) often has first claim, but other lienholders or judgment creditors with recorded liens may also have rights. County practice and specific statutory priorities determine the final order.
Where to start
- Confirm whether a surplus exists. Contact the county treasurer, tax collector, or the office that ran the tax sale. Provide the property address and the tax sale date and request a payment accounting showing sale proceeds, costs, and any remaining balance.
- Identify who holds the funds. In many counties the surplus is held by the county treasurer or deposited with the circuit court clerk until claimants come forward. The county office will tell you where the funds are located and what forms or procedures they require.
- Gather proof. Typical documents you will need: proof of identity, title documents or deed showing you were the owner at the time of sale (or another basis for your claim), any recorded mortgages or liens you hold, and documents showing your interest (probate paperwork if you claim as an heir or personal representative).
- File a formal claim. Counties commonly require filing a written claim or petition. In many cases you file a petition in the circuit court for the county where the property is located asking the court to order distribution of surplus funds. The petition must describe your interest, the amount sought, and attach supporting documents.
- Give notice. The law or court will usually require notice to the tax sale purchaser, the county, and any known lienholders or creditors so they can assert competing claims. Expect the court to set a deadline for objections and possibly a hearing date.
- Court hearing and order. If there are competing claims, the court will resolve who is entitled to all or part of the funds. If the court awards funds to you, it will enter an order directing the treasurer or clerk to disburse the surplus to you or to an appointed representative.
Deadlines and time limits
Maryland statutes and county procedures set deadlines for claiming surplus funds and for other tax-sale related rights. The time to file a claim may be limited. You should contact the county immediately after learning of a sale and check relevant provisions in Maryland’s Tax-Property statutes (Title 14 of the Maryland Code) for timelines and procedural rules. See Maryland’s Tax-Property law here: Md. Code, Tax-Property (Title 14). For practical county-level tax sale procedures, see the Department of Assessments & Taxation (SDAT) tax sale information: SDAT—Tax Sales in Maryland.
Common complications
- Competing claimants. Former owners, heirs, mortgagees, judgment creditors, and purchasers can all claim part of the surplus. Expect disputes if liens or judgments attach to the property.
- Claims after probate or title transfers. If ownership changed after the sale date (for example, via inheritance or a recorded transfer), you may need probate or other evidence to prove entitlement.
- Unclear county rules. Counties sometimes use different forms, filing locations, or notice rules. The county treasurer or clerk’s office can provide local instructions and any required forms.
Practical next steps
- Call the county treasurer or tax collector where the property is located. Ask whether a surplus exists and where the funds are held.
- Ask for the county’s surplus-claim form or instructions and any deadlines.
- Collect proof of ownership and identity, and any lien or assignment paperwork.
- If the county directs you to court, contact the clerk of the circuit court and ask how to file a petition for distribution of surplus funds. The Maryland Judiciary site: mdcourts.gov has local court contact information.
- Consider consulting a Maryland attorney experienced in tax sales or real property to handle complex disputes or contested claims.
Where to find official information
- Maryland Code, Tax-Property (Title 14): https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=taxp
- MD Department of Assessments & Taxation — Tax Sales: https://dat.maryland.gov/realproperty/Pages/Tax-Sales.aspx
- Maryland Judiciary (circuit court contact and filings): https://www.mdcourts.gov
Disclaimer: This article is educational only and not legal advice. Laws and local procedures change. For help with a specific case, consult a licensed Maryland attorney or the county offices involved.
Helpful Hints
- Start immediately. Some rights are time-limited; delays can jeopardize your claim.
- Get a written accounting. Ask the county for a written breakdown of the sale proceeds so you know the surplus amount (if any).
- Bring documented proof. Bring deeds, tax bills, probate letters, ID, and any lien or mortgage records when you file a claim.
- Check county websites. Many counties post tax-sale and surplus claim instructions online, plus required forms. The county treasurer’s or collector’s page is often the best local resource.
- Expect to serve notice. Be prepared to notify the purchaser and other claimants; the court or county will require proof of notice.
- Ask about fee waivers. If you are low-income and must file in court, ask the clerk about filing-fee waivers or reduced fees.
- Consider professional help if there are competing claims. If multiple parties claim funds or the amounts are large, a lawyer can protect your rights.