Understanding rights to surplus proceeds after a Wisconsin tax sale

Detailed answer: how surplus proceeds are handled in Wisconsin

When a county sells real property to collect unpaid property taxes, the sale may bring in more money than is needed to cover the taxes, interest, penalties, and sale costs. That excess amount is called the surplus proceeds. Wisconsin law requires the county to account for sale proceeds and to distribute any surplus to persons who have a lawful claim to those funds. See Wisconsin statutes governing delinquent taxes for the overall process: Wis. Stat. ch. 75.

The basic steps you should expect after a tax sale in Wisconsin are:

1. Accounting and deposit of sale proceeds.
   After the sale, the county calculates how much is needed to pay the outstanding taxes, interest, penalties, administrative and advertising costs, and any prior liens that the law requires to be satisfied from the sale. The county records the sale and holds any surplus proceeds separately while claims are resolved.
2. Who can claim the surplus.
   Typical claimants include the former owner, junior lienholders (mortgagees, judgment creditors, or other recorded lienholders whose interests are not fully satisfied by the sale), and sometimes successors in interest. Priority among claimants depends on the order and nature of recorded interests and on the county’s distribution under the applicable statutes.
3. How to make a claim.
   To recover surplus funds you must file a claim with the county office that handles tax sales (often the county treasurer or clerk) or in some cases with the circuit court. The county will require an application or verified claim form and supporting documentation showing your right to the money (proof of ownership or lien, recording information, identity, and any receipts or payoff statements). If multiple parties claim the same funds, the county may require the parties to resolve the dispute in circuit court.
4. Evidence and documentation.
   Typical documents to submit include government-issued photo ID, copies of deeds or recorded mortgages, lien or assignment documents, title reports, settlement statements, and any correspondence showing amounts owed or paid. The more complete and clear your documentation, the faster the county can process the claim.
5. Disputes and court involvement.
   If the county receives competing claims or is uncertain who is entitled to the surplus, the matter may be referred to the circuit court for determination. The court will sort out priorities among claimants and order distribution accordingly. If you expect a dispute (for example, you are a junior lienholder and the former owner or another lienholder also claims the funds), consult an attorney about bringing or defending a court action.
6. Unclaimed funds.
   Counties maintain records of unclaimed surplus proceeds. If no valid claim is made, the county will follow the procedures in the statutes or local rules for handling unclaimed funds. Because rules and timelines vary by county and by the specific statutory provisions that apply, contact the county treasurer’s office for their procedure.

Short hypothetical example

Suppose a parcel sells at a tax sale for $200,000. The county first pays $140,000 to clear the delinquent taxes, interest, fees, and prior liens required by law. The sale leaves a $60,000 surplus. The county will hold that $60,000 and ask interested parties (the former owner, any recorded mortgagees, judgment creditors, etc.) to submit claims supported by documentation. If only the former owner files a valid claim proving a residual interest, the county pays that person the surplus. If two lienholders claim the surplus, the county or the court will determine who has legal priority and distribute funds accordingly.

Where to start locally

• Contact the county treasurer or tax office in the county where the property sat. They handle the tax-sale accounting and can tell you how to file a claim.
• Ask the county which form or affidavit they require and whether you must petition the circuit court for distribution when claims conflict.
• Request a copy of the sale report and ledger showing the calculation of taxes, fees, and the surplus amount.

Helpful hints

• Act promptly. Although specific deadlines vary, the faster you file a clear claim with documentation, the faster the county can release funds if you are entitled.
• Gather proof of your legal interest before you contact the county: recorded deed, mortgage, assignment, title report, payment records, and identification.
• If you are a mortgagee or lienholder, provide recorded lien documents and any assignments to show priority.
• If the county refers the matter to circuit court, be prepared to file a petition to establish your right to the surplus and to serve other potential claimants.
• Keep copies of every document you submit and request a receipt for filings or payments.
• Check the county’s website for tax-sale procedures and required claim forms. County procedures may differ.
• If the surplus amount is substantial or the claim is disputed, consider consulting an attorney who handles tax-sale or real estate litigation.

Statutes and where to read more

The laws governing collection of delinquent property taxes and the disposition of sale proceeds are found in Wisconsin’s statutes on delinquent taxes. For the statutory framework and specific provisions, see: Wis. Stat. ch. 75. Your county treasurer or the county clerk’s office can point you to any county-specific rules or forms.

Disclaimer: This article provides general information about Wisconsin tax-sale surplus procedures. It is not legal advice and does not create an attorney-client relationship. For advice about a particular situation, contact a licensed attorney in Wisconsin or the county office that handled the sale.