Each year, the city sells the properties of owners who are delinquent on their taxes and utility fees at its in-rem auction. At these auctions, there are often intense bidding wars. These bidding wars result in the sale price being driven way above what’s needed to cover the back taxes. Here’s the catch: The city is only entitled to keep the amount that is owed, but this rarely happens.
The surplus—which is everything over and above what is owed in back taxes and user fees—belongs, by law, to the former homeowners.
Most of these former homeowners have no idea that they might be entitled to such a surplus. The Western New York Law Center reports that former property owners are rarely notified that they are owed these surplus funds—because there is no law requiring the state or county to inform them.
Officials estimate that nearly $12 million in surplus funds is owed to former homeowners. Notifying these former homeowners is not easy though—the Erie County Comptroller states that the surplus funds list groups properties by addresses only, not by names. The Comptroller noted that officials from the office could go to each property listed, but this would be ineffective because these former property owners were evicted, and since the house was sold they are clearly not there anymore.
If your property was foreclosed on and you are not sure if you should receive a surplus, there is a searchable database of Buffalo Property Action Surpluses from 2009-2014. Type in the year, street name, range in which you believe the surplus would be, and municipality.
Currently, the money that is owed to former homeowners is being held either by the state or the county. When the former property owner fails to collect this surplus money directly at the auction, the extra money goes to the Erie County Comptroller. The Erie County Comptroller holds this money for five (5) years and then the money is transferred to the State Comptroller’s Unclaimed Funds account—where it can languish for years.
State lawmakers are working on new legislation to get these former homeowners their money.
If you are a former Buffalo or Erie County homeowner and you lost your home through a tax foreclosure sale and you believe you are owed money, we can help. Give us a call at 716-636-7600.