Surplus funds Recovery in Alabama, generated from tax or foreclosure sales exceeding the debt owed,
can be recovered by former property owners or lienholders.
Tax sale excess is held by the county commission (or treasurer),
while foreclosure surplus is often held by the foreclosing trustee or court. Owners should check the Alabama State Treasurer’s website or county records.
Key Aspects of Surplus Funds Recovery in Alabama
- Tax Sale Excess:
- Following a tax sale, if the property sells for more than the taxes, costs, and interest, the excess must be returned to the former owner.
- Recent rulings affirm that landowners have a vested right to these funds, often with a 3-year redemption period where excess is used as a credit,
- but a total of up to 10 years to claim them before they potentially become county property.
- Foreclosure Surplus:
- When a mortgage foreclosure sale yields more than the loan balance, the surplus belongs to the borrower (or junior lienholders).
- How to Recover Funds:
- Unclaimed Property: Check the Alabama State Treasurer’s database for funds that have been turned over to the state.
- County Commission: Contact the County Commission where the tax sale occurred, as they hold the excess funds, often requiring proof of ownership and redemption.
- Foreclosure Trustee: For foreclosures, the trustee or law firm conducting the sale typically manages the funds.
- Legal Assistance: Because the process can be complex, engaging an Alabama attorney specializing in foreclosure or tax sales is recommended.
Common Pitfalls and Information
- Claims by Heirs: If the original owner is deceased, heirs can claim the funds through the probate process.
- Redemption Rights: In some cases, the excess funds are used to help the owner redeem the property within the statutory period.
