You found overbids and the person owed… Now what?
First, let’s have a look at a flowchart of processes after the tax deed auctions. There are 2 routes you can take and you will likely switch between the 2 depending on the circumstance in which you find yourself.
Further explanation can be found below the chart:
1. GATHER RECORDS OF OVERBIDS
Exact steps are taught in separate County Courses. We have video tutorials as well.
2. RESEARCH PROPERTY INFORMATION REPORT (O&E AND/OR TITLE REPORT)
Exact steps are taught in separate County Courses
3. CONTACT PERSON OWED SURPLUS
Explained in another lesson
4A. ASSIGNMENT OF INTEREST
The Assignment of Interest Form is used when the person is turning over their interest in the surplus to you. Some examples of when this may be used are as follows:
- You, as an Asset Recovery Business, pay them up front, an amount smaller than the surplus. They are taken out of the equation and you claim the full amount of surplus for yourself. Let’s say there is a $20,000 surplus. You agree that in exchange for you giving them $10,000 right now, they sign over the full claim to you. You receive and keep the full $20,000 ($10,000 profit for you). This, of course, is very risky unless there are NO liens or mortgages on the property and you are 100% positive the claim will be successful.
- You come to an agreement with the person that no money is exchanged at all until if and when the claim is successful. Let’s say there is $20,000 in unclaimed surplus. You agree that in exchange for them signing the Assignment of Interest over to you, when the claim is successful and you receive the $20,000, you will pay them a certain percentage or flat amount.
- For whatever reason, the person has zero interest in the claim at all. Maybe it’s a well-off friend or relative, maybe they just don’t care. If they have no plans on ever claiming the surplus, if they sign the Assignment of Interest over to you, you file the claim for yourself.
It IS possible the Clerk of Court may require a Power of Attorney (POA) as well. As long as the client is signing the Assignment of Interest, it can’t hurt to have the Limited POA signed as well.
4B. CONTINGENCY AGREEMENT
This is an Agreement between you and your client so you receive a percentage of the surplus as payment only if and when the claim is successful. Unlike using an Assignment of Interest, the surplus in this scenario is paid to the person, not you. Therefore, this Agreement protects you in the event the person receives the surplus and does not honor the terms of the agreement.
5B. LIMITED POWER OF ATTORNEY
This Limited Power of Attorney Form allows you to act on client’s behalf as if you are the claimant. This form is one that the client fills out (notarized) and you file it with the Clerk of Court along with the Surplus Claim Form and any other documents requested.
This form basically allows the Clerk of Court to treat you as if you ARE the person owed the surplus. It allows you to reply, submit forms, and any other steps that need to be taken.
YOU specify the terms on the Power of Attorney Form. You put down what you are allowed to do and the client agrees to the terms and signs the form.
5A & 6B CLAIM FORM TO COUNTY
Just as each county has their own processes and steps needed for claiming tax deed surplus, they also all have their own forms. We found blank claim forms for most of the 67 counties. However, for the ones we did not, we supply a blank, general claim form for download as well as contact information for the Clerk of Court to request one of their custom forms.
Important: Some counties are extremely protective of their Tax Deed Surplus. If you call to get a claim form, they will ask if you are the claimant, what is the tax deed # or parcel #, etc before they will release anything. If, at this point, you already have the claimant as a client, you would need to file a Power of Attorney with the Clerk of Court so they will release all information and forms to you.