Tax Overages [Pro’s and Con’s]

Tax Overages [Pro’s and Con’s]Statistics indicate a good number of people fail to open their mail these days.

Are you one of them?

Denial seems to trump the stress of seeing what’s inside the envelope. Since the economic downturn a few years ago, collection letters have helped keep the US Postal Service in business.

Ignoring overdue doctor bills or credit card notices comes with its own consequences—some dire—but overlooking the annual tax bill puts security on the line and homeownership in jeopardy.

When property owners fail to pay their tax bills, after a period of time the county or municipality puts a lien on their property.

If the property owner doesn’t pay delinquent tax bill plus interest, the tax lien certificate or tax deed is auctioned at an annual tax sale.

Tax Sale Overages

In an effort to recoup lost tax revenue on each parcel of real estate, the county awards the tax lien certificate or deed to the property to the highest bidder.

Sometimes a property sells for more than the amount of the tax bill. The profit margin between what is owed and what is paid is called the tax sale overage, or overbid.

What happens to the excess proceeds generated by the sale of the property?

**Important Info**

Most state governments have statutes in place that prohibit counties from absorbing the funds.

The county also has no means of managing real estate and only needs to collect what is owed in lost revenue.

That means the surplus cash must be allocated elsewhere.

Where Does The Money Go?

The county designates a specific time period in which the rightful property owner may claim the money.

Who is the owner?

The ruling varies from state to state, but usually the last owner of record at the time of foreclosure is eligible after filling out a few pages of paperwork and proving ownership.

The process sounds easy, and for the most part it is. Educated investors who have learned how to purchase tax defaulted property for pennies on the dollar stand to benefit most from this opportunity.

Yet, as with anything, there are pros and cons.


There are thousands of tax sales every year. Tax lien certificate investors often become excited by the process and some bid much more than they need to. Bad for them, good for you—IF you’re in a state that allows claims on tax overages. The county usually does all the paperwork after you file.


Not every state allows the collection of tax overages. Even if you’re dealing with those that do, it can sometimes takes a bit longer to get paid.

(Although, many states will have your check in the mail by a specific date set by the county, so be sure to check that out when starting with Overages…)

Tax Sale Overages can be started with little money upfront (the cost of certain key aspects – Mobile Notary and getting the list), and are a great place to start if your looking for a profitable way to get into Real Estate, besides Liens and Deeds, and are up for a different way of investing.

Thanks so much for reading today’s post – I’d love to hear your thoughts, so comment below with wisdom you took out of this, and share this if you think someone could benefit from it!

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