How to Recover Surplus Funds After a North Dakota Tax Sale

Disclaimer: This is general information only and not legal advice. Laws change and each case turns on its facts. Consult a licensed North Dakota attorney or your county offices for personalized guidance.

Detailed answer — what surplus funds are and who can claim them

When a county sells property at a tax sale, the sale proceeds first cover the unpaid property taxes, interest, penalties, and sale costs. If the sale brings in more money than those amounts, the excess money is called a surplus (sometimes called an overage or excess proceeds). Under North Dakota law, surplus funds do not automatically belong to the purchaser at the tax sale. Instead, the surplus generally belongs to persons with a lawful interest in the property immediately before the sale — typically the former owner and certain lienholders — and must be returned to them according to statutory priority.

North Dakota law governing tax liens, sales, and distribution of sale proceeds appears in Title 57 of the North Dakota Century Code. For an overview of the statutes that govern tax sales and related procedures, see the North Dakota Century Code, Title 57: https://www.legis.nd.gov/cencode/t57

Typical distribution order (how the money is allocated)

Costs of the sale and any court or administrative costs related to the tax sale.
The unpaid taxes, interest, and penalties that led to the sale.
Senior liens or encumbrances that were preserved by law (if statute preserves their priority).
After those obligations are paid, any remaining money is the surplus. The surplus is then available to the former record owner and to lienholders who have a valid claim to that equity according to statutory priorities and court determinations.

How a claimant recovers surplus funds in North Dakota — step by step

While county practice can vary, the standard steps a person with a potential claim should follow are:

Confirm a surplus exists. Contact the county auditor or treasurer where the property is located. Ask for the tax sale record and the sale distribution statement showing proceeds and what was paid. Counties keep records of tax sales and their distributions.
Identify who has a legal interest. Determine whether you are the former owner (on record prior to the sale) or a lienholder (for example, a mortgagee whose lien was not fully satisfied). Gather documents proving your interest: deeds, mortgages, assignments, payoff statements, tax notices, or a title report.
File a written claim with the county. Most counties require claimants to submit a written application or affidavit to the county auditor, treasurer, or sheriff (the office that handled the sale). Include proof of identity, proof of your interest in the property, and documentation of amounts claimed. Keep copies of everything.
Respond to county requirements and deadlines. Counties may have forms or specific procedures for surplus claims and may require additional documentation. Act promptly — some procedures impose deadlines or require claims to be resolved before funds are disbursed.
If the county withholds or disputes the claim, bring a court action. When competing claims exist, or when the county refuses to distribute funds, the usual remedy is to petition the appropriate North Dakota district court to have the surplus distributed. The court can determine priorities and order payment. Filing a civil action may require local procedural compliance and service on interested parties.
Collect the funds after approval. If your claim is approved by the county or the court, the county will distribute the funds. Expect procedures for identity verification and signature requirements before payment.

Timing and deadlines

Statutory deadlines and limitations can affect your claim. Some jurisdictions permit claimants a limited time in which to assert their rights; others require claimants to bring a court action to seek distribution. Because timing rules and the required procedures vary and are legally important, contact the county promptly and consult an attorney if you see competing claims or if the county refuses to release the surplus.

When you will likely need a lawyer

Consider hiring a North Dakota attorney if:

There are competing claims to the surplus (former owner, multiple lienholders).
The county refuses to release funds or to recognize your claim.
You must file a court action to enforce your claim or defend against one.
The surplus is a large sum and the legal issues are complex (priority disputes, assignments, or issues of notice/defective sale).

Helpful hints — practical tips to recover surplus funds

Start at the county level. The county auditor, treasurer, or sheriff’s office that conducted the sale can tell you whether a surplus exists and what local forms or steps they use.
Collect documentation before filing a claim: deed or title report showing prior ownership; mortgage documents; any assignment of lien; tax notices; and sale records.
Keep detailed records of communications with county officials: names, dates, and what they told you. This helps if you later need to litigate.
Watch for deadlines. Even if the statute of limitations is uncertain, prompt action preserves options and evidence.
Beware of unsolicited companies promising to recover surplus funds for a fee. Some are legitimate claims services; others are scams. If you hire a third party, get a written contract and understand the fee structure. Prefer licensed attorneys for legal claims.
Ask about tax consequences. Receiving surplus funds can have income tax implications. Consult a tax accountant or attorney if the amount is significant.
If you are a lienholder, document the priority and any assignments. Properly recorded liens and assignments strengthen a claim to surplus funds.
If the county directs you to court, find the local district court clerk’s office for filing requirements and whether a civil action or specialized petition is needed.

Where to look in the North Dakota statutes

North Dakota’s rules about tax liens, tax sales, and distribution of sale proceeds are found in Title 57 of the North Dakota Century Code. For statutory text and updates, consult the official code online: https://www.legis.nd.gov/cencode/t57

Because statutory language and local procedures can affect how a surplus claim must be presented and adjudicated, check the relevant sections in Title 57 and speak with county officials or a North Dakota attorney to confirm the exact statutory citations that apply to your situation.

Need help finding a North Dakota attorney experienced with tax-sale surplus claims or property-tax litigation? Contact your county bar association or the State Bar of North Dakota for referrals.