Detailed answer — how surplus recovery typically works in Indiana

Note: This is general information, not legal advice. Laws change and outcomes vary by county and case. For binding guidance, consult an attorney or the county treasurer/auditor.

1. What is a surplus?

A surplus (sometimes called overage) exists when the property sells for more than the amount needed to pay the delinquent taxes, interest, penalties, sale costs, and other statutory charges. That extra money does not belong to the purchaser; state law requires distribution of sale proceeds according to the statutory order.

2. Who can get the surplus?

Typical claimants (in order of priority set by statute and case law) include:

• The former record owner of the property (the person who lost the property at the tax sale).
• Secured lienholders (mortgages, judgment liens) that remain valid against the property under Indiana law.
• Other parties with legally recognized claims against the property under state statute or court order.

Priority and entitlement can be complex. Tax liens themselves often have a special priority position; whether a particular mortgage or lien still attaches after a tax sale depends on the facts and applicable statutes.

3. Where does the surplus money sit immediately after the sale?

After the sale, the county treasurer or auditor holds the proceeds. The county will apply the funds to the costs and taxes first, and any remaining balance is treated as surplus that the county must hold until it distributes the money to entitled claimants under the law.

4. How do you claim a surplus?

Steps to recover surplus funds:

1. Confirm a surplus exists. Contact the county treasurer or auditor’s office where the property is located and ask whether proceeds from the tax sale created a surplus for the parcel.
2. Identify the claimant(s). If you are the former owner, lienholder, or an assignee, you will likely be a claimant. If multiple parties claim the same funds, distribution may require resolution by the court.
3. Gather proof. Typical documents: government-issued ID, deed or title showing prior ownership, proof of lien (mortgage, judgment), assignment documents, proof of mailing or notice (if applicable), and any documents the county requests.
4. File a written claim. Most counties require a written, signed, and verified claim submitted to the county treasurer or auditor. The county may have a specific claim form or instructions on its website.
5. County review and distribution. The county reviews claims, verifies priority, and distributes funds to the entitled parties. If the county cannot determine rightful ownership or if claims conflict, the county may require a court order before releasing funds.
6. If necessary, seek a court order. When the county refuses to distribute or multiple claimants dispute entitlement, an interested party may file a claim petition in the appropriate trial court (usually the circuit or superior court in the county where the property is located) asking the court to determine who is entitled to the surplus and to order distribution.

5. Deadlines and time limits

Deadlines and forfeiture rules vary. Many states impose a statutory period for claiming surplus funds, after which unclaimed funds may be treated as abandoned and may escheat to the county or state. In Indiana, the process and timing for tax sales and distributions are governed by Title 6, Article 1.1 of the Indiana Code. Because specific time limits and procedural rules can differ by type of sale and by subsequent changes to the statutes, you should confirm the current rules with the county treasurer or by checking the applicable Indiana Code provisions.

Relevant statutory text and provisions about tax sales, distribution of sale proceeds, and related procedures are found in Indiana Code Title 6, Article 1.1 (taxation and collection). See: Indiana Code Title 6, Article 1.1 (Taxation). In particular, consult the parts of Article 1.1 that govern sale for delinquent taxes and distribution of proceeds.

6. What if the county refuses to pay?

If the county treasurer/auditor refuses a valid claim or two parties dispute entitlement, the typical remedy is to file a court action (a petition to determine entitlement to the funds). The court can resolve lien priorities, interprets competing documents (mortgages, assignments), and order the county to distribute the funds accordingly. Because litigation can be complicated, many claimants consult an attorney experienced in Indiana tax-sale or real-property matters.

7. Example (hypothetical)

Hypothetical: Jane owned a parcel with $12,000 in delinquent taxes and fees. The county sold the parcel at tax sale for $60,000. After paying taxes, penalties, interest, and sale costs totaling $14,000, the county shows a surplus of $46,000. Jane files a surplus claim with the county treasurer and provides photo ID and the recorded deed showing she was the owner at the time of sale. A mortgage holder files a competing claim. Because the mortgage may still have rights, the county asks the court to determine distribution. The court reviews the mortgage recording dates, applicable statutes, and issues an order allocating the surplus between Jane and the mortgage holder according to law.

Helpful hints — practical tips for recovering surplus funds in Indiana

• Start at the county treasurer or auditor’s office. They maintain sale records and will usually tell you whether a surplus exists and the local claim procedure.
• Bring proof. Have a government ID, recorded deed, mortgage/judgment documents, assignment papers, and any notices you received.
• Document your claim date. Get written confirmation when you file a claim or submit documents.
• If multiple claimants exist, expect the county to require a court order. Consider early communication with competing claimants to avoid litigation when possible.
• Act promptly. Although exact time limits vary, waiting increases the risk the county will treat funds as unclaimed and transfer them under local statutes or rules.
• Use the statute as a primary reference. Key governing provisions are in Indiana Code Title 6, Article 1.1. See: https://iga.in.gov/laws/2024/ic/titles/006.
• When in doubt, consult a lawyer. If a large surplus is at stake or claimants dispute rights, an attorney can help prepare a claim, file the necessary court petition, and protect your interests.