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Tax sale surplus is the excess funds remaining after the sale of a property at a tax lien foreclosure or tax deed sale:

Explanation

In a tax lien foreclosure, the winning bid at a public auction may be higher than the total amount owed to the foreclosing entity. In a tax deed sale, the proceeds pay for delinquent taxes and auction costs, and any remaining funds are considered surplus

Distribution

In New York, the Court-appointed Referee deposits surplus funds with the New York State Department of Finance. The Department of Finance then disburses the funds to the proper party upon receiving a court order. 

Claiming surplus

Anyone with a right, title, interest, claim, lien, or equity of redemption in the property can file a claim with the court for a share of the surplus. 

Returning surplus funds

Some municipalities in New York return surplus funds to the former owner, while others do not. 

Legislation

New York State Senate Bill 2023-S7514 would require the return of surplus funds to the former owner. The bill would also direct local governments to notify the former owner of the surplus and how to obtain it.

the process to claim surplus funds by governmental lienholders, non-governmental lienholders, and owners of record.

Claimants have 120 days from the date of the Notice of Surplus Funds to submit a notarized claim to the Clerk and Comptroller. Claims can be submitted by mail, email, fax, or hand delivery. Once the claim window has closed, the Clerk and Comptroller will process all claims according to priorities set forth