Detailed answer — who gets surplus funds and how the process works

What are surplus funds? When a county sells real property to collect unpaid property taxes, the sale proceeds first pay the delinquent taxes, penalties, interest, and the costs of the sale. Any money left over after paying those amounts is the “surplus.” Texas law requires that surplus proceeds be paid to the person or persons entitled to them.

Statutory framework. The distribution of sale proceeds and the priority of payment is governed by the Texas Tax Code (see the provisions governing proceeds from a tax sale). For an overview of the rules on tax sales and application of sale proceeds, see Texas Tax Code, Chapter 34: https://statutes.capitol.texas.gov/Docs/TX/htm/TX.TAXC.htm#34.05 and the provisions addressing distribution of sale proceeds: https://statutes.capitol.texas.gov/Docs/TX/htm/TX.TAXC.htm#34.21.

Who may be entitled to surplus funds?

• The former property owner(s) of record at the time of sale.
• Junior lienholders (mortgagees, other recorded liens) who had an interest at the time of sale and whose liens were extinguished by the tax sale.
• Others with legal claims or equitable interests established by recorded instruments or court order.

Typical step-by-step process to recover surplus funds

1. Confirm whether a surplus exists. Start by obtaining the official sale record from the county tax assessor-collector, county clerk, or district clerk where the sale occurred. The sale record will show the gross sale price, amounts applied to taxes and costs, and whether any surplus was generated.
2. Identify who holds the funds and how they are held. Counties often hold surplus funds in a special account or the county treasury while they await claimants. The county tax office or the county treasurer’s office can confirm whether surplus funds are being held and the amount.
3. Gather documentation showing your claim. Typical documents depend on the claimant type:
   • Former owners: deed showing ownership before the sale, photo ID, and proof of interest.
   • Mortgagees or lienholders: recorded mortgage or lien instrument, chain of assignment of the lien, and proof that the lien existed at the time of sale.
   • Heirs or successors: documentation such as probate or other instruments establishing authority to claim funds.
4. Contact the county and submit a written claim. File a written claim or application with the county office that holds the surplus (commonly the tax assessor-collector, county treasurer, or district clerk). The county will have its own forms and requirements. Include certified copies of your supporting documents, identification, and contact information.
5. If the claim is uncontested, the county pays the surplus. When the county accepts your claim and verifies your entitlement, it will release the funds to you (often by check). Counties follow state law and local procedures in verifying and processing claims.
6. If multiple parties claim the same funds or the county refuses payment, court action may be necessary. When conflicting claims arise, claimants commonly file a lawsuit in the county district court asking the court to determine entitlement to the surplus (for example, an interpleader or a claim to funds). The court will resolve competing claims and direct distribution of the funds.
7. Keep records and follow up. Keep certified copies of sale records, your claim, and any correspondence with the county. If the county delays, ask about timelines and ask whether they will refer the matter to the district attorney or county attorney for direction.

Practical timeline and deadlines

State law establishes how sale proceeds are applied, but local practice controls many procedural deadlines for filing claims with the county. Counties often have internal deadlines or procedures for proving entitlement. If you believe you have a claim, act promptly—delays can make it harder to locate records or resolve disputes. If the county rejects your claim, you may need to file a court action to protect your rights.

What if the county says it no longer has the money?

If the county has disbursed the funds or cannot locate them, you may need to ask the county for a record of disbursement. If disbursement looks incorrect, you may need to bring a court action to trace or recover the funds and to establish entitlement.

When to consult a lawyer

Consult an attorney when claims are contested, when multiple claimants exist, or when the county refuses to release funds despite a clear entitlement. An attorney can help prepare documents, represent you in court, and handle complex chain-of-title or lien-priority issues.

Helpful hints — quick checklist to claim surplus proceeds in Texas

• Check the county tax sale records first. Verify sale price, payments applied, and whether a surplus exists.
• Contact the county tax assessor-collector and county treasurer to learn the county’s claim procedure and required forms.
• Collect clear proof of your entitlement: recorded deeds, mortgage or lien instruments, assignment documents, probate orders, and government-issued ID.
• Ask for written confirmation of the county’s decision or the status of the funds so you have a record.
• If other parties assert competing claims, keep calm and get legal help to avoid losing rights by missing court deadlines.
• Preserve originals and deliver only certified copies unless the county asks for originals.
• Document all communications with county officials—dates, names, and the substance of conversations.