Detailed Answer
Short summary: When a property is sold at a Pennsylvania tax sale and the sale price exceeds the taxes, interest, penalties and sale costs, the excess money (the “surplus”) does not automatically go to the former owner’s bank account. Pennsylvania law requires the surplus to be held and distributed according to statutory priority. Owners and lienholders with an interest in the property must claim the surplus from the county tax claim bureau or by petitioning the court. The process requires documentation proving your legal interest and can involve a verified claim, a hearing, or a court petition when disputes arise.
What law governs surplus funds?
The process for tax sales and the handling of sale proceeds in Pennsylvania is governed primarily by the Real Estate Tax Sale Law. For statutory text and details, see the Pennsylvania statute compilation for Title 72 (Taxation and Fiscal Affairs) and the Real Estate Tax Sale Law of 1947 (commonly cited as 72 P.S. § 5860.101 et seq.). You can review the law on the Pennsylvania General Assembly website: 72 P.S. (Real Estate Tax Sale Law).
Who can claim the surplus?
- Former record owner of the property (or the owner’s heirs or estate representative).
- Any lienholder or mortgagee who held an enforceable lien on the property at the time of the tax sale.
- Other parties with a documented legal interest (for example, a judgment lien recorded prior to the sale).
Priority rule (how the surplus is distributed)
Distribution follows statutory priority: costs and the tax claim itself are paid first. Any remaining surplus is distributed to entitled parties in the order established by law. Typically, this means prior recorded liens and mortgages (in order of priority) and then the former owner. The exact priority and distribution rules are in the Real Estate Tax Sale Law and related rules for the county tax claim bureau.
Step-by-step process to recover surplus funds
- Identify where the surplus is held. Contact the county Tax Claim Bureau, the county sheriff, or the county treasurer where the property sits. Counties handle tax sales differently—some sales are run by a Tax Claim Bureau, others by the sheriff—so start with the county office that handled the sale.
- Confirm whether a surplus exists and the amount. Ask for the sale docket, a distribution worksheet, or a copy of the certificate of sale. The county will tell you whether there are surplus proceeds after paying taxes, interest, penalties, and sale costs.
- Gather documentation proving your right to the funds. Typical documents include:
- Photo ID and proof of address.
- Deed or recorded instrument showing ownership (or a death certificate and letters testamentary/letters of administration if the owner is deceased).
- Recorded mortgage or lien documents showing priority (if you are a lender or lienholder).
- A copy of the tax sale certificate or sale documents referencing the property.
- Submit a verified claim or application. Most counties require a written, notarized claim form or affidavit plus supporting documents. The county’s Tax Claim Bureau or sheriff will have a specific form or instructions. File the completed claim and keep a copy with proof of filing.
- If the county approves, collect the funds. Once the county verifies your claim and there are no competing claims of higher priority, they will release the surplus to you. Release may require an executed receipt or release form.
- If there is a dispute or competing claims, the county may require a court petition. If multiple parties claim the money or the county finds issues with claims, it may require the parties to go to the Court of Common Pleas (often through a petition for distribution or declaratory relief) for a judicial determination of who is entitled to the surplus. You may need to file a petition and serve interested parties; the court will then decide distribution.
- Watch statutory deadlines. Some statutory or procedural deadlines apply to making claims. If you wait too long, you may lose the ability to claim the funds. If the funds remain unclaimed for a long period, the county may be permitted to transfer unclaimed surplus according to statute or county procedure.
Special situations
- Owner is deceased: Heirs or the estate representative must present probate documents (letters testamentary/administration) and a death certificate to claim the surplus.
- Mortgage or lienholder: A mortgagee should present the recorded mortgage, payoff demand, and evidence the mortgage was in effect before the tax sale date. Priority disputes may require court involvement.
- Multiple claimants: If available surplus cannot satisfy all claims, claimants must show priority; the county or court will handle pro rata distributions or priority-based distributions per statute.
Where to start in your county
Search for your county’s Tax Claim Bureau, Sheriff, or Treasurer web page and call their tax sale office. Ask these specific questions: (1) Was there a surplus after the tax sale? (2) What is the exact amount? (3) What form and documents do you need to file a claim? (4) Are there competing claims on file? County staff can often provide the claim form and instructions.
Useful statutory reference: See the Real Estate Tax Sale Law of 1947, commonly cited as 72 P.S. § 5860.101 et seq., for provisions about tax sales, sale proceeds and distribution. The Pennsylvania General Assembly provides the statutes online: 72 P.S. (Real Estate Tax Sale Law).
Timeline and common delays
Counties may take weeks to months to process a surplus claim, especially if the claim requires title searches, confirmation of lien priority, or if other claimants come forward. If the county requires a court petition, the process will take longer—typically months—depending on court schedules and whether the claim is contested.
When to consider hiring an attorney
Consider getting an attorney if:
- Multiple parties claim the same surplus and you need help asserting priority.
- The county refuses to release funds based on a disputed interpretation of priority or documentation.
- You need to file a court petition for distribution or defend against one.
If you hire counsel, choose an attorney experienced in Pennsylvania tax sale law and local county practice.
Disclaimer: This article is for general information only and does not constitute legal advice. It does not create an attorney-client relationship. For advice about your specific situation, contact a licensed Pennsylvania attorney.
Helpful Hints
- Start by calling the county office that ran the tax sale — the Tax Claim Bureau, sheriff, or treasurer — and ask for the surplus/distribution clerk.
- Keep careful records (dates, names, copies of forms). Get written receipts when you file a claim.
- If you are a lienholder, produce a certified copy of the recorded lien and any payoff statements to prove the lien existed before the sale.
- If the former owner died, bring probate documents showing your authority to act for the estate.
- Ask the county for their claim form and a list of required supporting documents — counties often have different administrative procedures even though state law sets the overall rules.
- Act promptly. Unclaimed funds may become harder to recover the longer you wait and could be subject to statutory disposition.
- If a claim is contested, consider getting legal help early to avoid missing deadlines or losing priority rights.