Ten Years After Losing Home To Tax Foreclosure, Ex-Homeowner Scores Unexpected Payday By Collecting The Surplus Funds Generated By The Auction Sale That She Didn't Know Belonged To Her

In Buffalo, New York, WIVB-TV Channel 4 reports:

• Homeowners know if you don’t pay your property taxes, you could lose your home to a tax foreclosure sale. But what thousands of former Erie County property owners don’t seem to understand is, whatever a buyer pays–above and beyond the back taxes–goes back to the previous owner.
  
  Bottom line: If your home is sold at a tax auction to pay taxes you owe, it is only to ensure the back taxes get paid. But since those properties are sold at auction, the bidding usually takes the final sale price well above the amount of the back taxes.
  
  Erie County officials believe those surplus funds amount to millions of dollars owed to thousands of former property owners.
  
  “Crystal” of Buffalo lost her house in a tax foreclosure sale 10 years ago, and just collected her surplus funds two weeks ago.
  
  The single mother of two grown sons asked us not to use her last name, but was very happy with the big check she got from the State Comptroller’s office.
  
  Crystal had left her house in the care of friends, to take a job in another state, but they let her down—neglecting to keep up with the taxes and mortgage, which quickly led to a bankruptcy filing, and the house was sold by the city at a foreclosure auction in 2005.
  
  “I didn’t know what to do, so I just took the advice of others and it didn’t go very well,” Crystal recalled. But fast forward to 2014, and she learned, in a letter, the foreclosure sale had a silver lining.
  
  “Just a random letter, and I didn’t believe it. I thought it was a scam. So I kind of put it aside and left it there.”
  
  That letter was from a local business known as a “finder”, or “searcher” that scours the Internet for unclaimed funds and unclaimed property all over the country, and it turned out Crystal had a substantial amount of money—she is keeping the amount to herself–in the New York State Comptroller’s Unclaimed Funds account.
  
  But Crystal needed the help of Paulette Cooke, an attorney for the Western New York Law Center (1) to get those surplus funds–her money–from the sale of her home. It requires a court order.
  
  “Once the bidder pays the money, the city taxes are paid, the county taxes are paid, and then that money left over is the surplus money, and the old property owner is entitled to that money.”
  
  But before Crystal’s money was turned over to the state, city officials turned over her funds–and the surplus funds owed thousands of other former property owners–to the Erie County Comptroller’s office, where the money is held in an unclaimed funds account for 5 years.
  
  Why does the county hold onto all that money, instead of giving it to the former homeowners? Comptroller Stefan Mychajliw said, they have no way of contacting a foreclosed owner like Crystal, because all they get from the city is a list of addresses, a court order, and a check for the surplus funds.
  
  “Even if we went to that address, obviously the person is no longer living there. We can go to every single address on that list, but because they were evicted and the house was sold, they are obviously not even there anymore.”
  
  Mychajliw said, the county is holding about $14 million in unclaimed funds from tax auctions, mortgage foreclosures, and other legal proceedings, which the government is not allowed to touch.
  
  After 5 years, the county turns the money over to the state, which can make it even tougher to claim. Theoretically those unclaimed funds can remain with the State Comptroller’s Office forever, if it is not claimed by court order.
  
  The Western New York Law Center is offering to help homeowners who recently lost their homes through tax foreclosure sales, and former homeowners who are owed surplus funds from tax sales. The Western New York Law Center can be contacted by phone at 855-0203, ext. 118.

Source: Foreclosed homeowners could be owed millions from tax sales.

(1) Western New York Law Center is a non-profit law firm providing legal representation to low-income Western New Yorkers in civil matters.