Recovering Surplus Funds After a Tax Sale in Oregon | Oregon Estate Planning

Detailed answer — How surplus funds are handled after an Oregon tax sale

Short answer: When a county sells a property at a tax foreclosure sale in Oregon, the sale proceeds first pay the costs of the sale, the past-due taxes, interest, and any superior liens. Any remaining money (the surplus or overage) can belong to the former owner or to junior lienholders. To recover a surplus, an interested person must identify the surplus, file a claim with the county (usually the tax collector or county clerk/treasurer), provide proof of their right to the funds, and comply with any local procedures and statutory time limits. Oregon law that governs tax foreclosures and distribution of sale proceeds is in ORS Chapter 312. (See: https://www.oregonlegislature.gov/bills_laws/ors/ors312.html)

How the sale proceeds are distributed

At a tax foreclosure sale, the county applies the sale proceeds in a fixed order: costs of sale and collection, the delinquent taxes and interest, and then liens in order of priority. Any amount left after those payments is the surplus (also called excess proceeds or overage).
Typically, priority is set by statute and recorded lien priority. Where junior lienholders or other claimants have recorded interests, they may be entitled to all or part of the surplus ahead of the former owner. If no competent claims exist, the former owner is typically the primary claimant to the remaining funds.

Who can claim the surplus?

Former owner (the person who owned the property at the time of the tax foreclosure)
Junior lienholders and judgment creditors who recorded their liens before the sale and whose liens survive the foreclosure
Other parties with a legally recognized interest in the property (e.g., some recorded easements or possessory interests), depending on priority

Typical step-by-step process to recover surplus funds in Oregon

Confirm whether a surplus exists. Check the county tax sale records and contact the county tax collector, treasurer, or clerk. Counties often publish sale results and whether proceeds exceeded amounts owed.
Determine the proper claimant(s). Review recorded documents (deeds, mortgages, liens) at the county recorder’s office or online to see who has priority. If multiple parties claim the money, the county may require proof and may distribute according to lien priority.
Follow the county’s claims process. Counties generally require a written claim or application. You will likely need to supply: identification, proof of ownership or lien (deed, promissory note, recorded lien), a signed claim form, and any required affidavits.
Provide supporting proof. The county may ask for certified copies of recorded documents, affidavits explaining the relationship to the property, and a government-issued photo ID. If you are not the record owner but claim the funds through inheritance, power of attorney, or assignment, you will need documents proving that status (probate paperwork, assignment letters, valid power of attorney, etc.).
County review and distribution. The county reviews competing claims, resolves priority questions, and then issues payment to the rightful claimant(s). If there is a dispute, the county may withhold distribution pending resolution or require a court order.
If the claim is denied, or multiple claimants dispute the funds, the claimant can seek relief in court. In some cases, claimants file a petition in the county circuit court to obtain an order directing distribution of the surplus.

Deadlines and practical timing

Statutory timing and procedural requirements for tax foreclosures and distribution of sale proceeds are set out in ORS Chapter 312. Consult the rules in that chapter to confirm specific filing or redemption deadlines: https://www.oregonlegislature.gov/bills_laws/ors/ors312.html. Counties may also set local administrative rules and forms. Act promptly: the longer you wait, the more complicated a recovery can become.

What if the county cannot find the rightful claimant?

If nobody claims the surplus, counties must follow Oregon law for unclaimed or un-distributed funds. Those funds may be held by the county and, in some instances, eventually reported under the state unclaimed property procedures. You can check the Oregon unclaimed property resource to see if funds were turned over: https://sos.oregon.gov/unclaimed/Pages/default.aspx

When you should consult an attorney

When multiple claimants dispute the surplus or when lien priority is unclear
If the county denies your claim and you need to pursue court action
If the documentation of ownership or assignment is complicated (probate, trusts, powers of attorney)

Practical example (hypothetical): County A sells a foreclosed property for $200,000. The delinquent taxes, penalties, interest, and costs total $50,000. There is a senior mortgage recorded earlier for $120,000 and a junior lien for $10,000. After paying the sale costs and senior liens, the county has a $20,000 surplus. The county will check recorded interests: the junior lienholder may be entitled to be paid next from the surplus up to the amount of that lien, and any remainder would be payable to the former owner (or their heirs/representatives). Each claimant must produce records to support their claim. If the county cannot resolve competing claims, the parties may need a court order.

Statute reference: Tax foreclosure and sale procedures are governed by the Oregon Revised Statutes, chapter 312. Read the chapter here: https://www.oregonlegislature.gov/bills_laws/ors/ors312.html

Disclaimer: I am not a lawyer. This article provides general information about Oregon tax-sale surplus procedures and is not legal advice. For advice about your specific situation, contact a licensed Oregon attorney or the county tax collector’s office.

Helpful Hints

Start at the county tax collector/treasurer: they hold sale records and will tell you whether a surplus exists and which office handles claims.
Pull the chain of title at the county recorder’s office to see recorded mortgages, liens, and assignments before filing a claim.
Bring documentary proof: deed, mortgage, lien instruments, assignments, probate documents, and photo ID.
Ask the county for the exact claim form and checklist. Counties sometimes publish forms online or will mail them to you.
If you represent a deceased owner’s estate, bring certified letters from the probate court or court orders proving your authority to claim funds.
Keep copies of everything you submit and get a dated receipt from the county.
If competing claims arise, consider consultating an attorney early — resolving complex priority disputes often requires litigation.
Check the Oregon unclaimed property database if the county says it has turned funds over to the state: https://sos.oregon.gov/unclaimed/Pages/default.aspx