Right to claim excess proceeds from a tax sale
Tex. Tax Code § 34.04(a), (c)(5)
In plain words
When a tax sale brings in more than the taxes and costs, the extra money (excess proceeds) is held by the court clerk for two years. The clerk must mail you a notice if the excess is more than $25. You claim it by filing a petition in the court that ordered the sale before the second anniversary of the sale.
Who is protected
The former owner (a defendant in the tax judgment, close relatives, or heirs) of Texas property sold for taxes.
When it applies
- Only in Texas.
- Only after the foreclosure sale.
- Only if you are behind on property taxes.
What you can do
File a petition for excess proceeds
File under the same cause number as the tax suit and serve the other parties at least 20 days before the hearing.
Deadline: Before the second anniversary of the sale
Open the toolBe careful with “surplus finders”
Anyone buying your claim must wait 36 days after the deposit and pay you at least 80% of it.
Open the toolRead your state guide and find free help
Open the state page for the process, deadlines and legal-aid contacts in your state.
Open the tool
Honest limits
- Other lienholders and later taxes are paid before former owners.
- Texas did not change this law in response to Tyler v. Hennepin County (2023); Texas already returned the surplus, but unclaimed money goes to the taxing units after two years.
- This is general education, not legal advice. Laws change and details matter — check the current official text or talk to a legal aid lawyer or HUD-approved housing counselor.
The law
- State lawClaims for excess proceeds
Tex. Tax Code § 34.04(a), (c)(5)
Exact part: (a), (c)(5)
What it says: A former owner may petition for excess proceeds before the second anniversary of the sale.
Read the official texthttps://statutes.capitol.texas.gov/Docs/TX/htm/TX.34.htm#34.04 - State lawClerk’s notice and two-year hold
Tex. Tax Code § 34.03(a)
Exact part: (a)
What it says: The clerk notifies the former owner and holds excess proceeds for two years.
Read the official texthttps://statutes.capitol.texas.gov/Docs/TX/htm/TX.34.htm#34.03
Court cases
- Homeowner wonCited for this rightTyler v. Hennepin County
Tyler v. Hennepin County, 598 U.S. 631 (2023)
a government that sells a home for unpaid taxes and keeps the value beyond the tax debt takes property without just compensation
- Homeowner wonSame topicSauceda v. GMAC Mortgage Corp.
Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135 (Tex. App.—Corpus Christi–Edinburg 2008)
a wrongful-foreclosure claim requires a defect in the sale proceedings, a grossly inadequate selling price, and a causal connection between them, and that homeowners who offer evidence of each are entitled to a trial
- Homeowner wonSame topicCharter National Bank-Houston v. Stevens
Charter Nat'l Bank-Houston v. Stevens, 781 S.W.2d 368 (Tex. App.—Houston [14th Dist.] 1989)
when a mortgagee deliberately chills the bidding at a foreclosure sale, the injured owner seeking damages need not also prove a grossly inadequate selling price
- Homeowner lostSame topicRice v. Pinney
Rice v. Pinney, 51 S.W.3d 705 (Tex. App.—Dallas 2001)
an eviction after foreclosure may proceed while a wrongful-foreclosure suit is pending, because the eviction court decides only the right to immediate possession and not title
- Homeowner wonSame topicHall v. Meisner
Hall v. Meisner, 51 F.4th 185 (6th Cir. 2022)
a homeowner's equity in property taken for a smaller tax debt is protected property, and taking it without compensation states a federal takings claim
- Homeowner wonSame topicJones v. Flowers
Jones v. Flowers, 547 U.S. 220 (2006)
when mailed notice of a tax sale is returned undelivered, the government must take additional reasonable steps to notify the owner before selling the property
- Homeowner wonSame topicMennonite Board of Missions v. Adams
Mennonite Bd. of Missions v. Adams, 462 U.S. 791 (1983)
a person with a recorded interest in property is entitled to notice by mail or equally reliable means before a tax sale, and publication or posting alone is not enough
Related rights
Right to redeem your home after a property-tax sale
Tex. Tax Code § 34.21(a), (e)
If your residence homestead (or agricultural land) is sold at a tax sale, you can buy it back within two years after the buyer’s deed is recorded. You repay the bid and certain costs plus a premium: 25% in the first year, 50% in the second. For other property the window is 180 days. Owners 65+, disabled owners and disabled veterans can also stop a tax suit or sale on their homestead by filing a deferral affidavit.
Read this rightThe government cannot keep your home equity beyond the tax debt
U.S. Const. amend. VTakings Clause
If your home is taken or sold to pay property taxes, the government may collect what you owe, but it may not keep the extra value. Keeping the surplus is a "taking" of your property without just compensation, which the Fifth Amendment forbids (Tyler v. Hennepin County, 2023). You may be able to claim the surplus, but you usually must follow your state's claim process and deadlines.
Read this rightThe right to real notice before the government takes or sells your home
U.S. Const. amend. XIV, § 1Due Process Clause
Before a state or county sells your property — for example at a tax sale, or through a court foreclosure — the Constitution requires notice that is reasonably likely to actually reach you. If the government knows your address, publishing a notice in the newspaper is not enough. If a mailed notice comes back unclaimed, the government must take extra reasonable steps to reach you, if it practicably can.
Read this rightAfter a discharge, creditors cannot collect the wiped-out debt from you
11 U.S.C. § 524(a)(2)
A bankruptcy discharge wipes out your personal liability for most debts in the case. After that, the law forbids creditors from suing, calling or otherwise trying to collect a discharged debt from you personally. A court can hold a creditor in contempt if there was no fair doubt that its conduct was barred.
Read this rightRenters get at least 90 days' notice after a foreclosure
12 U.S.C. § 5220 note(Pub. L. 111-22, div. A, § 702(a)–(b))
If you rent a home that goes through foreclosure, the new owner must give you a notice to move at least 90 days before you have to leave. If you have a real (bona fide) lease signed before the foreclosure notice, you can usually stay until the lease ends. The exception is when the new owner will live in the home; even then you still get the 90 days' notice.
Read this rightFair handling of your escrow account
12 C.F.R. § 1024.17(c)(1)
If your servicer collects money for taxes and insurance (escrow), it must pay those bills on time as long as you are not more than 30 days behind. It must review the account every year and send you a statement. It cannot keep more than a small cushion (one-sixth of a year's payments), and it must refund a surplus of $50 or more within 30 days of the review. When you pay off the loan, it must return what is left within 20 business days.
Read this right