Detailed Answer
Overview: When a locality in Virginia sells real property to collect unpaid real-estate taxes, the sale can sometimes generate money in excess of the tax, interest, penalties, and sale costs. That excess (commonly called “surplus funds” or “overage”) does not automatically go to the purchaser. Under Virginia practice, a former owner or another person with a superior legal claim may be entitled to those funds. This article explains the usual steps to locate and claim surplus funds, what documents you will likely need, and when you should get legal help.
Important: This information explains Virginia procedures and statutes. It is not legal advice.
1. Confirm whether a surplus exists and who holds the money
– Contact the local Treasurer’s office (or the county/city office that conducted the tax sale). Ask whether the tax sale produced surplus funds and whether the office is holding them. If the Treasurer does not hold the funds, the Circuit Court clerk’s office may have records showing disbursement or court proceedings involving surplus funds.
– Ask for the tax sale docket or a copy of the Treasurer’s sale report and any accounting showing the sale price, taxes and charges paid, and the remaining balance (the surplus).
2. Who can claim the surplus?
– Typical claimants include the former owner of record at the time of the sale, a person who holds a recorded lien with priority, an estate representative if the owner is deceased, or others with a legal right to the property proceeds.
– Priority depends on recorded liens and statutory rules. Secured creditors or taxing authorities with superior liens may have priority over the former owner. That means a former owner is not automatically first in line in every situation.
3. Documents you will likely need
Prepare to show proof of both identity and your legal right to the surplus. Typical documents:
- Photo ID for the claimant.
- Proof of ownership at time of sale (deed showing the owner or a property tax bill).
- The Treasurer’s tax sale report, sale docket entry, or sale deed (if available).
- If the owner is deceased: death certificate and documents showing authority to act for the estate (letters testamentary, letters of administration, or an affidavit of heirship if the estate is small and local law allows).
- If you act for the owner but are not the owner: a valid power of attorney, guardianship order, or court appointment showing your authority.
- Any mortgage, lien payoff information, or bankruptcy-related documents that affect distribution rights.
4. How to make the claim
– Start with the Treasurer’s office. Many localities have a formal claim form or will accept a written affidavit. Submit the required identity and ownership documents with the claim form.
– If the Treasurer accepts your claim and there are no competing claims or superior liens, the office should pay you the surplus funds after verifying amounts and title issues.
– If the Treasurer refuses your claim, or if multiple claimants compete, the Treasurer or a claimant may ask the Circuit Court to resolve distribution (an interpleader action or a petition for distribution). In that case, you will need to file a claim in the circuit court where the property is located and present evidence supporting your entitlement.
5. Timing and deadlines
– Procedures and internal deadlines vary by locality. Do not delay: contact the Treasurer and the Circuit Court clerk promptly. Acting quickly preserves your ability to gather documentation and assert a claim if multiple parties are involved.
– If the former owner is deceased, estate administration or probate may be necessary before the court will release funds to heirs or beneficiaries.
6. When to consult an attorney
Consider hiring a lawyer if:
- There are competing claims from lienholders or purchasers.
- The owner is deceased and the estate lacks probate or letters.
- The Treasurer or other party refuses to release funds and court action looks likely.
- The amount at stake is significant or the title history is complex.
Relevant Virginia statutes and resources
– Virginia handles tax sales and collections under Title 58.1, Chapter 39 of the Code of Virginia. The chapter explains the tax sale process, notices, sale procedures, and related duties of treasurers and clerks. See: Va. Code §58.1, Chapter 39 (Collection of Delinquent Taxes and Tax Sales).
– For local practice, contact the county or city Treasurer’s office and the Clerk of the Circuit Court in the jurisdiction where the property sits. They can provide forms, local rules, and records of the sale.
Practical example (hypothetical)
Example: A county treasurer sold a house to satisfy unpaid taxes and collected $10,000 more than the taxes and sale costs. The Treasurer holds $10,000 as surplus funds. The former owner’s daughter believes the surplus belongs to her mother’s estate. She contacts the Treasurer, provides her mother’s death certificate and letters testamentary showing she is the estate’s personal representative, completes the Treasurer’s claim form, and provides proof that there are no superior liens. The Treasurer releases the surplus to the estate. If a bank later claims a lien with priority, the Treasurer or court would resolve the competing claims.
Final steps
1. Contact the Treasurer’s office and the Circuit Court clerk in the property’s locality immediately.
2. Gather identity, ownership, and estate documents.
3. File the Treasurer’s claim form or a written affidavit. If the Treasurer cannot or will not release the funds, prepare for possible court proceedings and consider hiring a lawyer.
Disclaimer: This information is educational and is not legal advice. Laws change and local procedures vary. If you need help asserting a claim, consult a Virginia attorney or contact the local Treasurer and circuit court clerk for current, jurisdiction-specific guidance.
Helpful Hints
- Contact the local Treasurer and Circuit Court clerk first — they hold the records and often the funds.
- Act quickly. The earlier you contact the offices, the better your chance to obtain records and prevent competing claims.
- Bring originals and certified copies of documents (death certificate, letters, power of attorney) when possible to avoid delays.
- If the owner died without probate, ask the clerk whether small‑estate procedures or an affidavit of heirship will suffice for release.
- Be prepared to show whether any mortgages or liens existed at the time of sale; those may reduce or eliminate the surplus available to the owner or heirs.
- If the Treasurer directs you to court, expect to file a petition for distribution or an interpleader; an attorney can draft and file those pleadings.
- Keep careful records of all communications, receipts, and submissions to the Treasurer or court.
- If someone else offers to “claim the surplus for you” for a fee, be cautious — get everything in writing and consider legal advice before signing.