Recovering Surplus Funds After a Tax Sale in Virginia

What are “surplus funds” after a tax sale?

When a locality sells real property at a tax sale to recover unpaid real-estate taxes and the sale price exceeds the total amount due (delinquent taxes, penalties, interest, advertising and sale costs, and other statutory charges), the extra money is called the surplus or overage. The law provides a process to determine who gets that surplus and how it is paid out.

Who may claim the surplus?

Common possible claimants include:

• The former property owner (or their heirs or estate).
• Holders of recorded liens or mortgages that have priority over the purchaser’s interest.
• Other parties with an equitable interest or judgment lien, depending on priority and recording dates.

Priority among competing claims follows Virginia law regarding lien priority and the particular rules governing tax sales. Tax and municipal liens are typically satisfied before junior liens, but individual fact patterns differ. For statutory details see Virginia Code, Title 58.1, Chapter 39 (Collection of taxes; tax sales): https://law.lis.virginia.gov/vacode/title58.1/chapter39/.

Typical step-by-step process to recover surplus funds in Virginia

1. Confirm that a surplus exists and who holds it.

   Contact the local treasurer (or the office that conducted the tax sale) and ask whether the sale produced surplus funds. The treasurer’s office or the clerk of the court can tell you whether funds are being held and the amount.

2. Determine the correct procedure and deadline locally.

   Localities follow the Virginia tax-sale statutes and may have local rules or forms. Ask the treasurer what documentation they require, whether you must submit a written claim or file a petition in circuit court, and any claim deadlines. Time limits and procedures can vary by locality and by the type of sale.

3. Gather documentation to support your claim.

   Typical documents include government-issued photo ID, recorded deed or deed history showing ownership, probate or letters testamentary if claiming as an heir or personal representative, mortgage or lien instruments if you are a lienholder, tax receipts, and any notices from the treasurer or purchaser. If you represent a business, bring appropriate organizational and authorization documents.

4. File a written claim with the treasurer or file a petition in circuit court.

   Many claimants begin by submitting a written claim to the treasurer with supporting documents. If the treasurer determines competing claims exist, or if local law requires, a claimant may need to file a petition with the circuit court asking the court to determine the rightful recipients and to order distribution. The treasurer can explain whether they can disburse administratively or need a court order.

5. Serve notice and resolve competing claims.

   If multiple claimants appear, the court typically requires notice to interested parties and may hold a hearing. The court will evaluate lien priority, recorded interests, and equitable claims. The court issues an order directing the treasurer on distribution.

6. Receive distribution or pursue appeal.

   Once the treasurer has authority (either by administrative determination or by court order), funds are distributed in priority order. If a claimant disagrees with the decision, they may have the right to appeal the court’s order under Virginia appellate procedure—consult an attorney promptly to preserve rights and deadlines.

Common evidentiary and procedural points

• Prove ownership or lien priority by producing recorded documents from the clerk’s office or a title report.
• If the owner is deceased, present probate documents or letters of administration.
• Be prepared to show identity and authority to claim funds for an entity or estate.
• Expect the treasurer to require original documents or certified copies for large disbursements.

What happens if no one claims the surplus?

Unclaimed funds do not remain indefinitely in practical terms. Local rules and state law provide procedures for handling unclaimed or unresolved surplus funds, which can include further attempts at notice, distribution to entitled lienholders, or retention by the locality after specified steps. Ask the local treasurer about the specific unclaimed-funds rules and any statutory periods that apply. See Title 58.1, Chapter 39 for the statutory framework: https://law.lis.virginia.gov/vacode/title58.1/chapter39/.

When to consult an attorney

Consider hiring a Virginia attorney if:

• You face competing claimants or lien disputes.
• You cannot get clear guidance or timely action from the treasurer.
• Large sums are involved or you need help proving priority or preparing court pleadings.
• The property owner is deceased and the estate/probate process complicates the claim.

Helpful Hints

• Act quickly — local offices can tell you about deadlines for claims or required filings.
• Bring originals and certified copies of deeds, probate letters, lien instruments, and ID.
• Request a written statement from the treasurer about the surplus amount and whether they will disburse administratively or need a court order.
• If multiple parties claim funds, expect a court hearing and consider legal representation.
• Check county or city treasurer webpages — many list forms and instructions for surplus claims.
• If you represent heirs, estate, or a business, bring proof of authority (letters testamentary, corporate resolution, etc.).
• Keep detailed copies of everything you file and any communications with the treasurer or court.