Recovering Surplus Funds After a Colorado Property Tax Sale: A Clear FAQ

Short answer: If a Colorado property sells for more than the taxes, penalties, interest, and sale costs, the county treasurer will hold the surplus (sometimes called an overage or excess proceeds). The former owner and certain lienholders may claim that money. You must contact the county treasurer who conducted the sale, submit a written claim with proof of your interest, and meet any timing and documentation rules set by Colorado law and the local treasurer.

Detailed answer — how the surplus recovery process works in Colorado

This answer explains, step by step, what typically happens after a Colorado tax sale and how a claimant can recover surplus funds. This is a general guide; procedures and time limits can vary by county and by case facts.

1. What creates a surplus (overage)?

When a county sells a property to collect delinquent property taxes, the sale first covers the unpaid taxes, late fees, interest, advertising and sale costs, and any senior liens required by statute. If the winning bid exceeds those amounts, the excess is the surplus. Counties must hold the surplus until valid claims are resolved.

2. Who can claim the surplus?

The former property owner (or owners).
Recorded lienholders (mortgages, judgment liens) that were properly recorded before the tax lien or as the statutes provide.
Other parties with a legal interest in the property (heirs, personal representatives, assignees) may also qualify.

3. Priority and distribution

The general order is: (1) sale costs and taxes, (2) senior recorded liens or claims required to be paid, and (3) any remaining surplus is payable to the person or persons entitled under statute or court order. If multiple people claim the surplus, the county treasurer may require proof and may interplead the funds into court to determine proper distribution.

4. How to make a claim — step by step

Identify the county that conducted the tax sale. The county treasurer’s office handled the sale.
Contact the county treasurer promptly. Ask for the procedures and forms for claiming surplus funds from a tax sale. Many counties list claim forms and instructions on their websites.
Prepare documentation. Typical documents include:
- Government-issued photo ID for the claimant.
- Proof of ownership or legal interest (recorded deed, mortgage, assignment, probate documents, court order, power of attorney, etc.).
- A copy of the tax sale record or bid sheet (the county can usually provide this).
- A completed surplus-claim form (if the county uses one) and contact information for all claimants.
File the written claim with the county treasurer and attach certified copies of supporting documents. Send or deliver according to county instructions (some counties allow in-person filings; others require mail or electronic submission).
Wait for the treasurer’s review. The treasurer may verify ownership, contact competing claimants, and request additional proof. If claims conflict, the treasurer may interplead the funds to district court for judicial resolution.
If the treasurer approves the claim, sign any required affidavits and accept the disbursement. The county will typically issue a check or warrant payable to the approved claimant(s), possibly minus administrative fees allowed by law.

5. Time limits and acting quickly

Colorado law and county rules control deadlines for claiming surplus funds. Because timelines and procedures can vary, act quickly after learning of a sale. If you delay, you may face additional hurdles or risk forfeiture of the claim. Contact the county treasurer as soon as possible to learn specific timing rules for that county.

6. When the county files an interpleader or takes the matter to court

If claimants dispute entitlement, the county treasurer may deposit the funds with the court or ask a court to decide who gets the surplus. In that case, a claimant may need to hire an attorney to present evidence and argue priority. The court may order distribution based on recorded liens and equitable considerations.

7. Typical costs and potential deductions

You should expect certain deductions before a surplus is paid: sale costs, publication and advertising fees, administrative charges the county may lawfully assess, and payment of senior liens and taxes. These reduce the amount available to a claimant.

8. Example (hypothetical)

Hypothetical facts: County sells a property at a tax sale for $100,000. The delinquent taxes, interest, penalties, and sale costs total $60,000. A recorded mortgage that has lawful prior claim is paid from the sale for $30,000. The remaining $10,000 is the surplus. The former owner and a junior lienholder both file claims. The county treasurer reviews documents, finds the mortgage was senior and already paid, and distributes the $10,000 to the former owner after verifying identity and title documents. If the parties dispute, the treasurer may deposit the $10,000 into court until a judge decides.

9. Where to find the relevant Colorado law

Colorado statutes govern tax liens, sales, and procedures. See Colorado Revised Statutes, Title 39 (Taxation) for state statutes related to property taxation and enforcement. For official statutory text and related provisions, visit the Colorado General Assembly statutes portal:

Colorado Revised Statutes — Title 39 (Taxation)

Also contact your county treasurer’s office for local procedures and forms. The Colorado Department of Local Affairs provides resources about local government operations and county contacts: Colorado Department of Local Affairs.

Helpful Hints

Contact the county treasurer first — they hold the surplus and control the initial claims process.
Gather recorded documents early: deeds, mortgages, probate papers, assignment instruments, and photo ID. Certified copies are often required.
Recordings matter. Parties with properly recorded interests have stronger claim priority. Know what is on the property chain of title before the tax lien attached.
Act quickly. County procedures and deadlines may limit your ability to claim surplus funds later.
If multiple claimants compete, be prepared to litigate. Consider consulting an attorney experienced in property or title disputes if the treasurer interpleads the funds or denies your claim.
Expect costs. Legal fees, court costs, and allowable county administrative fees may reduce what you receive.
Keep copies of everything you submit and get receipts or written confirmation from the treasurer’s office.

Where to get help

If the process looks complex or if competing claims exist, consider talking to an attorney who handles property, real estate title, or tax sale matters in Colorado. An attorney can evaluate priority issues (who had a recorded interest and when), prepare court pleadings if required, and protect your rights.

Disclaimer: This article explains general information about recovering surplus funds after a tax sale in Colorado. It is for educational purposes only and is not legal advice. Laws and procedures change. For advice about your specific situation, contact a licensed Colorado attorney or the county treasurer who conducted the sale.