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8510-8517 Distribution of Tax Sale Proceeds: Excess Proceeds

8510. GENERAL INFORMATION 
Excess proceeds are those proceeds remaining after satisfaction of all of the amounts discussed in M-8501 (Rev. & Tax. Code §4674). 

"Excess proceeds" are retained in the delinquent tax sale trust fund for a period of one year following the date of recordation of the tax deed to the purchaser of the property.  During the one-year period, the excess proceeds may be claimed by any party of interest in the property at the time of the sale (Rev. & Tax. Code §4675).  Parties of interest and their order of priority are as follows: 

1) First, valid lienholders of record prior to recordation of the tax deed to the purchaser, in the order of their priority; and 

2) Then, any person with title of record to all or any portion of the property prior to recordation of the tax deed to the purchaser.

In the event that more than one party of interest claim the excess proceeds, the board of supervisors establishes the priority and extent of their claims (Rev. & Tax. Code §4675). 

NOTE:  The county should not distribute excess proceeds until 90 days after the division of the excess proceeds has been determined.

8511. NOTICE OF RIGHT TO CLAIM EXCESS PROCEEDS
When excess proceeds exceed $150, the county is required to provide a notice of rights to claim the excess proceeds.  If the last known address of a party of interest cannot be obtained, the county must publish notice of the right to claim excess proceeds in a newspaper of general circulation in the county.  Publication is not required if the cost to publish is equal to or greater than the amount of the excess proceeds (Rev. & Tax. Code §4676).

1) Mailed Notice -- Within 90 days after the sale, the tax collector should send by certified mail a written notice of the right to claim excess proceeds to the last known mailing address of each party of interest, as defined in Revenue and Taxation Code sections 4675 and 4676.  Form SCO 8-20 is recommended.  It is recommended that a return receipt be requested for each mailed notice.

A claim form may be included with the mailed notice.  See Form SCO 8-21 for a sample generic claim form that can be modified to include lienholders and the last assessee of record.

2) Published Notice -- If the last known address of a party of interest cannot be obtained, the notice of the right to claim excess proceeds should be published.  Publication is not required if the cost to publish is equal to or greater than the amount of the excess proceeds (Rev. & Tax. Code §4676).  See M-9800 and Figure 9.8 for the publication requirements.

8512. OBTAINING NAMES AND ADDRESSES OF PARTIES OF INTEREST
A reasonable effort must be made to obtain the names and last known mailing addresses of parties of interest.  See M-8150, M-8151, M-8157 and the County Tax Collectors' Guide to the Sale of Tax-Defaulted Property for more details.

8513. REIMBURSEMENT FOR NOTICE COSTS
The cost of obtaining the names and last known addresses of parties of interest and of mailing or publishing the notices required is deducted from the excess proceeds and distributed to the county general fund (Rev. & Tax. Code §§4674, 4676(b)).  See also M-9811.

8514. ASSIGNMENT OF INTEREST IN EXCESS PROCEEDS
After the property has been sold by the tax collector, the parties of interest in the property at the time of the sale may assign their interest on a dated, written instrument explicitly stating that the right to claim the excess proceeds is being assigned and that each party to the assignment has made full disclosure of all facts relating to the value of the right being assigned.  This disclosure requirement applies to former lien holders (Rev. & Tax. Code §4675(a)) and to persons who would be vested with title (Rev. & Tax. Code §4675(b)).

If any person or entity in any way acts on behalf of, or in place of, any party of interest with respect to filing a claim for any excess proceeds, he/she must submit proof with the claim that the amount of excess proceeds has been disclosed to the party of interest.  The claim must show that the party of interest has been advised of his/her right to file a claim for excess proceeds on his/her own behalf.

Any attempted assignment not complying with these requirements has no effect (Rev. & Tax. Code §4675). 

Excess proceeds may be distributed only to those parties who have filed a claim (Rev. & Tax. Code §4675).

NOTE:  The county may require any proof deemed necessary to establish the claimant's interest in the property.  This could include the requirement that the claimant obtain and provide a title report to the county.  The tax collector should contact the county legal advisor if there are questions regarding the propriety of any claim for excess proceeds.

8515. BOARD MAY DELEGATE AUTHORITY
The board of supervisors of any county may, by resolution, authorize any county officer to perform on its behalf any act required or authorized to be performed under Revenue and Taxation Code section 4675.

The resolution must specify administrative rules and procedures concerning any act performed under the authorization.  (Excess proceeds may be distributed only to those parties who have filed a claim (Rev. & Tax. Code §4675).

8516. UNCLAIMED EXCESS PROCEEDS 
This section was deleted January 1, 2011. 

8517. DISTRIBUTION OF EXCESS PROCEEDS NOT CLAIMED BY LIENHOLDER(S)
A party of interest must file a claim, together with proof of interest, within one year following the recordation of the tax collector's deed to the purchaser (Rev. and Tax. Code §4675(a)).  If a lienholder chooses not to file a claim and there are excess proceeds remaining, the proceeds should be distributed to any other lienholders, provided they have filed a claim.  Any proceeds remaining are distributed to the person with title of record prior to the recordation of the tax deed to the purchaser, provided the person has filed a claim (Rev. and Tax. Code §4675(b)).