As discussed in our article entitled: Redemption of Excess Proceeds, the former owner of a property that was subject to a tax lien foreclosure is entitled to claim the excess proceeds following the sale of the property. The process of obtaining any excess proceeds can be found in that article and apply to the situation whereby an investor takes an assignment or transfer the former owners claim to the excess proceeds.

Due to the amount of the excess proceeds that may be available following a tax lien foreclosure and the financial stress the former owner may be experiencing, investing in the assignment or transfer of claims to excess proceeds could be quite lucrative. However, the potential liability for failing to property assign or transfer a claim for excess proceeds makes doing so properly imperative.

As alluded to above, the Texas Tax Code allows for a former owner to assign or transfer his/her rights to claim any excess proceeds following a tax lien foreclosure to a third party.
Recovering excess proceeds following the assignment or transfer of the former owners claim to the excess proceed requires strict adherence to the requirements set forth by the Texas Legislature.

The list of requirements is fairly extensive, but includes limitations on the time in which the assignment or transfer can take place; limitations as to the fee to be paid for the assignment or transfer; requirements concerning the document authorizing the assignment or transfer; and requirements regarding when the assignment or transfer fee must be paid to the former owner.

Failure to comply with the requirements results in the assignee or transferee being liable to the assignor or transferor for the amount of the excess proceeds obtained, plus attorney’s fees and expenses. Even if no excess proceeds are obtained, the assignee or transferee who attempts to obtain excess proceeds without complying with the requirements is liable to the assignor or transferor for attorney’s fees and expenses.

It is imperative that the process is started as soon as possible so as to eliminate the chance of missing the deadline and forfeiting the excess proceeds. The real estate attorneys at The Farah Law Firm, P.C. have the knowledge and experience to help you properly assign or transfer a claim for excess proceeds. If you are considering taking an assignment or transfer of excess proceeds from the former owner of a property that was subject to a tax lien foreclosure contact the attorneys at The Farah Law Firm, P.C. to discuss the process.