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How to claim tax sale excess proceeds in Tennessee

When a Tennessee property sells at a tax sale for more than what was owed, the leftover money does not go to the county. It sits with the court until someone with a right to it asks. Here is who that is, how to ask, and how to avoid giving a big cut to someone else for doing it.

Short answer

After a Tennessee tax sale is confirmed, anyone with an interest can file a motion in the same tax lawsuit to claim the excess. The court pays the taxing entity first, then lienholders, then the former owners who were defendants in the suit, or their heirs. There is no fixed filing deadline in the statute, but unclaimed money eventually goes to the state's unclaimed property program.

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Who is paid, and in what order

After the court confirms a tax sale, the excess proceeds are paid out in this order:[1]

  1. Any remaining taxes owed to the taxing entity
  2. Lienholders as of the date of the sale
  3. Lienholders whose liens arose after the sale
  4. The taxpayer who was a defendant in the tax lawsuit, or that person's heirs or devisees
  5. Anything left goes to the state under the unclaimed property law
If there was a mortgage or a judgment lien on the property, those creditors are ahead of the former owner. The excess you can actually collect is what is left after them.

How to file a claim

  1. Wait for the confirmation order. Claims are made after the court confirms the sale.[1]
  2. File a motion in the same tax lawsuit, in the court that handled the sale.[1]
  3. Serve everyone with an interest at least 30 days before the hearing.[1]
  4. Record your proof of ownership in time. If you claim through a deed or as an heir, the deed or affidavit of heirship generally has to be recorded more than 30 days before the hearing.[1][9]
Forms and fees vary by county
The statute does not set a clerk fee, but counties do. Davidson County's Clerk and Master and Blount County each list a $75 filing fee, and Blount says funds are released 30 days after the order.[2][3] Knox County publishes its motion form along with the statute.[4] Ask the clerk of the court that handled your sale for its current form and fee.

Is there a deadline?

The statute does not set a fixed filing deadline. A claim can be filed until the money is forwarded to the state. The money is not presumed abandoned until the later of all pending motions being resolved or one year after the redemption period ends.[1]

Once it reaches the state, you can still claim it, for free, through the Treasury's unclaimed property program at ClaimItTN.[6]

Before you sign with a recovery firm

If a tax sale produced excess proceeds, expect letters offering to "recover" the money for a percentage. Know the rules first:

Fee caps apply only once the state holds the money
Tennessee caps a locator's fee at 10% or $50, whichever is greater, for property already held by the state Treasurer, and agreements made within two years after the money reaches the Treasurer are void. For property not yet reported to the state, an agreement must be in writing and show the value before and after the fee, but we found no percentage cap.[5] The Treasury also requires locators to be licensed private investigators.[7]
Court filings are the practice of law
In Tennessee, preparing and filing a court claim for someone else, or representing them in court, is the practice of law. A non-lawyer doing that for a fee is breaking the law.[8] You can file your own motion or hire your own attorney.

Better than excess proceeds: your full equity

Excess proceeds are what is left after a sale that only had to cover a tax bill. If the sale has not happened yet, selling the property yourself first puts the equity in your hands at closing, with the taxes paid from the proceeds. See selling before a Tennessee tax sale and the redemption period. Mortgage foreclosure surplus follows a different process; see foreclosure surplus funds.

No cost to you. The buyer pays a 10% premium on top of the winning bid, and FALCO is paid from that premium. FALCO routes the property to a licensed Tennessee real estate and auction firm.

Questions

Common questions

What are excess proceeds from a Tennessee tax sale?

They are the money left after a tax sale brings more than the delinquent taxes, interest, penalties and costs. The excess is held by the court that handled the tax lawsuit and is paid out on motion to the people entitled to it.

Who gets tax sale excess proceeds in Tennessee?

The statute sets an order: first any remaining taxes owed to the taxing entity, then lienholders as of the sale, then later lienholders, then the taxpayer who was a defendant in the tax suit or that person's heirs or devisees. Anything still unclaimed goes to the state under the unclaimed property law.

Is there a deadline to claim tax sale excess proceeds in Tennessee?

The statute does not set a fixed filing deadline. A claim can be filed until the money is forwarded to the state. The money is not presumed abandoned until the later of all motions being resolved or one year after the redemption period ends.

How do I file a claim for excess proceeds?

File a motion in the tax lawsuit after the sale is confirmed, and serve it on all interested persons at least 30 days before the hearing. If you are claiming through a deed or as an heir, the deed or affidavit of heirship generally has to be recorded more than 30 days before the hearing. Many clerks publish a form and charge a filing fee.

Should I sign with a surplus recovery company?

Read the agreement first. Tennessee caps locator fees at 10% or $50, whichever is greater, only once the money is held by the state Treasurer, and voids agreements made within two years after it reaches the Treasurer. Before that, we found no percentage cap. You can file the motion yourself or through your own attorney, and only a licensed attorney can represent you in court.

What does it cost to sell through FALCO before a tax sale?

No cost to you. The buyer pays a 10% premium on top of the winning bid, and FALCO is paid from that premium. FALCO does not buy property. Licensed Tennessee real estate and auction firms run every sale.

Sources

  1. [1]Tenn. Code Ann. § 67-5-2702 (excess proceeds)
  2. [2]Davidson County Clerk and Master, Excess Sale Proceeds information sheet (revised 12/30/2025)
  3. [3]Blount County, Excess Proceeds
  4. [4]Knox County Trustee, Motion to Claim Excess Sale Proceeds (with statute)
  5. [5]Tenn. Code Ann. § 66-29-176 (agreements to locate unclaimed property)
  6. [6]Tennessee Department of Treasury, Unclaimed Property
  7. [7]Tennessee Department of Treasury, Third-Party Locators
  8. [8]Tennessee Supreme Court, unauthorized practice of law statutes (Tenn. Code Ann. §§ 23-3-101, 23-3-103)
  9. [9]Tenn. Code Ann. § 30-2-712 (recorded affidavit of heirship)

Keep reading

Tax sale redemption periodBefore a Tennessee tax saleForeclosure surplus fundsTell us what you are dealing with

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This page is general information about Tennessee and federal law, not legal, tax, or financial advice, and not a promise about any outcome. Laws change and every situation is different. For advice about your circumstances, consult a licensed Tennessee attorney, CPA, or other licensed professional. FALCO is not a law firm, a government agency, or a court, and is not affiliated with any of them. FALCO does not buy, list, broker, or sell anything itself. Licensed Tennessee auction firms, and licensed real estate firms where real estate is involved, run every sale.