Excess Proceeds & The 2-Year Redemption Period in Texas: What You Need to Know
- Jonah Wilson
- Feb 12
- 2 min read
If your homestead was sold at a tax foreclosure auction in Texas, you may still have the right to redeem your home within two years—but what happens if you also claim the excess proceeds from the sale? Let’s break it down.
Step 1: Understanding Excess Proceeds
When a property is sold at a tax foreclosure auction, the county uses the funds to cover:✅ The outstanding property taxes✅ Any penalties, interest, and court fees
If the property sells for more than the amount owed, the extra money is called excess proceeds, and the former homeowner is legally entitled to claim it.
Step 2: How to Claim Excess Proceeds in Texas
To recover excess funds, you must:1️⃣ Verify if excess proceeds exist – Check the county tax assessor or clerk’s office in the county where your home was foreclosed.2️⃣ File a petition with the court – In Texas, excess proceeds are held by the district court. You must submit a motion for release of excess funds, typically with supporting documents like:
Proof of ownership (deed or title)
Valid ID
A copy of the foreclosure judgment
3️⃣ Wait for the court’s approval – A judge will review your claim and may schedule a hearing. If approved, the court will release the funds.
Step 3: Redeeming Your Home Within 2 Years
Texas law gives homeowners two years to buy back their homestead property after a tax foreclosure sale. However, there are conditions:🔹 In Year 1 – You must pay back the auction price + 25% interest.🔹 In Year 2 – You must pay back the auction price + 50% interest.
⚠️ If you already claimed the excess proceeds, you MUST return that money as part of the redemption cost.
Example Scenario
Let’s say:
Your home sells for $150,000 at auction
The unpaid taxes were $50,000
You have $100,000 in excess proceeds
🔹 You claim the $100,000 and use it elsewhere.🔹 One year later, you decide to redeem your home.🔹 You must now pay $150,000 + 25% ($37,500) = $187,500 to redeem it.🔹 Since you took the $100,000 in excess proceeds, you need to return it as part of the redemption payment.
Key Takeaways
✔️ Claiming excess proceeds does NOT cancel your right to redeem your home.✔️ If you redeem, you must return the excess proceeds as part of your redemption cost.✔️ The longer you wait, the more expensive redemption becomes.✔️ If you don’t redeem within two years, the buyer at auction becomes the full legal owner.
💡 Need help with the process? Our team specializes in recovering excess proceeds and advising homeowners on their redemption rights. Call us at 866-800-6632 today!
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