How to Recover Surplus Funds After a Tax Sale (New Mexico)

Short answer: If a county tax sale (for unpaid property taxes) produces a sale price higher than the taxes, interest, penalties and sale costs, the extra money (the “surplus”) belongs to the former owner or other lawful claimants (for example, recorded mortgagees or lienholders). In New Mexico you usually must submit a formal claim to the county office that handled the sale or, if required by local practice, to the district court. If no one claims the funds, they may eventually be turned over to the state as unclaimed property. This article explains the typical steps, what documents you will need, how competing claims are resolved, and where to look in New Mexico law and government resources.

Disclaimer

This is general information, not legal advice. I am not a lawyer. For help with a specific case, consult a qualified New Mexico attorney or contact the county office that handled the tax sale.

Detailed answer — step-by-step process

1. Confirm whether a surplus exists and who holds the money

After the tax sale, obtain the sale records from the county treasurer, county clerk, or the office that ran the sale. The county’s sale record will show the sale price and the amounts applied to taxes, interest, penalties and costs. If the sale price exceeds those amounts, the difference is the surplus. The county treasurer or clerk typically holds the surplus while the county follows statutory or local procedures for distributing it.

Key New Mexico government resources:

New Mexico Taxation & Revenue Department, Property Tax pages: https://www.tax.newmexico.gov/
New Mexico Legislature – Statutes and Constitution (search Title 7, Taxation & Revenue): https://www.nmlegis.gov/Legislation/Statutes_and_Constitution
New Mexico State Treasurer — Unclaimed Property (if funds remain unclaimed): https://statetreasury.nm.gov/what-we-do/unclaimed-property/

2. Identify who can claim the surplus

Common lawful claimants (in order of typical priority):

Former record owner(s) of the property at the time of the sale.
Persons or entities holding recorded liens against the property (mortgagees, judgment lienholders) to the extent their liens remain after the tax debt is paid.
Other parties with legally enforceable interests expressly recognized by statute or court order.

Priority among claimants depends on recording dates, the nature of the lien, and the applicable New Mexico statutes and local procedures. If multiple claimants exist, the county or the district court may require documentation and/or a court proceeding to determine distribution.

3. File a claim — how and where

Follow these steps to file a claim:

Contact the county treasurer or county clerk where the tax sale occurred. Ask whether they accept surplus claims directly or if the county requires a petition in the district court. Many counties publish instructions and claim forms online or at the county office.
Prepare supporting documents. Typical documents include: a government-issued photo ID, proof of ownership (deed or tax bill), documents showing the date you held title, copies of recorded liens (if you are a lienholder), and a copy of the tax sale record showing the surplus amount.
Complete any required county forms or a court petition. If the county accepts administrative claims, you will likely file an application with the county and attach your proof. If the county requires court adjudication, you or your attorney will file a petition in the county district court asking the court to order distribution of the surplus.
Serve notice if required. If you file in court, you will usually need to serve notice on other known claimants and sometimes publish notice so unknown claimants have an opportunity to come forward.
Wait for the county or court to rule and distribute the funds. If no competing claim appears and your documentation is in order, many counties will release the surplus directly to you. If there are competing claims, the court will resolve them and then direct distribution.

4. Timing and deadlines

Deadlines vary. Some counties set time limits for administrative claims; others require petitioning the district court within a certain period. If a surplus remains unclaimed for an extended time, the county may remit the money to the New Mexico State Treasurer as unclaimed property under state unclaimed property rules. To avoid forfeiting rights, act quickly after discovering a surplus and ask the county about any filing deadline.

5. If you and another party both claim the surplus

If multiple parties claim the same funds (for example, a former owner and a mortgagee), the county or a court will determine priority. Expect to show documentary evidence of your claim and the date and nature of your interest. The court will apply New Mexico property and lien priorities, and may allocate funds proportionally or in priority order based on the law and recorded instruments.

6. If the county refuses to release the funds

If the county declines to release a valid surplus claim, you can usually seek relief by filing a petition in the district court asking for an order requiring distribution of the funds. Consider hiring an attorney experienced in property tax sales or civil litigation to handle contested cases.

7. If funds become unclaimed property

When surplus funds remain unclaimed, the county may ultimately transfer them to the New Mexico State Treasurer’s unclaimed property program. You can search and claim unclaimed property through the State Treasurer’s website. Time limits and procedures for reclaiming funds from the State Treasurer differ from county procedures, so check the Treasurer’s guidance promptly.

Hypothetical example (illustrative)

Fact pattern: A parcel sells at a county tax sale for $50,000. The county applies $10,000 to past taxes, interest and costs. The surplus equals $40,000.

Process: The county posts the sale record and holds the $40,000 surplus. The former owner submits a surplus claim to the county with a copy of the deed, government ID and the sale record. A recorded mortgagee also submits a claim showing its lien. The county requests documentation and, because there are competing claims, the matter proceeds to district court. The court reviews priorities and distributes the surplus accordingly (for example, paying the mortgagee to the extent of its unpaid lien balance, then any remainder to the former owner), or orders distribution in another manner consistent with law.

Helpful hints

Start at the county level. The county treasurer or county clerk is the first place to determine surplus status and to get instructions on filing a claim.
Gather clear documentation: deed, tax bills, recorded mortgages or liens, IDs, and the tax sale report. Organized evidence speeds review and helps protect your claim.
Ask the county about published notices and service requirements. Counties may require publication or notice to known lienholders before they release funds.
Act quickly. Unclaimed funds can be transferred to the State Treasurer’s unclaimed property program if you wait too long.
If your claim is contested, consider hiring a New Mexico attorney experienced with tax sales and quiet-title or surplus fund claims.
Use official government resources for records and guidance: county offices, the New Mexico Taxation & Revenue Department website, and the New Mexico State Treasurer’s unclaimed property page.

Where to get more information and forms

Contact the county treasurer or county clerk in the county where the property is located. County websites usually list contact information and procedure notes.
New Mexico Taxation & Revenue Department: https://www.tax.newmexico.gov/
Search New Mexico statutes (Title 7, Taxation & Revenue) and county rules: https://www.nmlegis.gov/Legislation/Statutes_and_Constitution
New Mexico State Treasurer — Unclaimed Property: https://statetreasury.nm.gov/what-we-do/unclaimed-property/

If you want, tell me the county where the property was located and I can list the county office you should contact and typical local forms or practices for surplus claims in that county.