Indiana Tax Surplus Finders Die Quick Death

Tax Sale Surplus Finders Soon to be Extinct in Indiana

Another noble profession dies

Indiana tax sale surplus funds have led to some of the best opportunities in the country for collecting finder fees. The funds, created when more is paid for a property at a tax lien sale than what was owed, and available to the owner of the property upon the issuance of a tax deed, often went uncollected.

This created the perfect opportunity for finders to track down the claimants of these funds and earn a commission.

It is no surprise that most counties in Indiana have never made earnest attempts to contact the rightful claimants to make them aware of the funds, because the county gets to impound all funds on hand 3 years after the tax sale.

And, due to the nature of foreclosure property, most property owners were listed at the property address and never updated their address after they were removed from the property. So a letter went undelivered to the property, and that was it!

I outlined the process in my recent article, “Government Tax Sales – How you can Profit Without Attending Auctions”.  Smart tax sale investors have always used unclaimed surplus fund recovery as a legitimate way to increase their income while helping tax sale victims recoup at least some of their loss.

It appears that this industry will likely die this year, 2010, with the passage of updated Indiana tax sale code sections, especially in section 6-1.1-24-7 and 7.5

The two sections that put the “nail in the coffin” for finders everywhere?

1. Section 7.5 (b)1- Requires payment of compensation of not more than ten percent (10%) of the amount collected from the tax sale surplus fund – in other words, finder fees are limited to 10% from the moment funds are available.

A few adventurous souls might continue working at the 10% level, but this section will make it even more difficult to eke out a living:

2. Section 7 (c) 2 – Requires a court order for release of funds,  if the claimant is using a power of attorney or acquired the property by deed after the initial sale takes place.

While obtaining a court order for release of funds is not terribly expensive in most cases, there is already very little profit to work with, on only 10% commission.  The delays that this new code will introduce add the final insult.

The irony of the new regulation is that, while ostensibly to keep Indiana victims of tax sale from being “ripped off” by “bounty hunters” like ourselves, the change in rules will almost certainly result in LESS surplus funds being returned to the rightful owners overall.  The counties will no longer have the handful of finders, working on their behalf for free, to help return the funds due Indiana’s tax sale owners.

But they like it that way.  The decrease in collections that will result will lead to more revenue for the county.

If Indiana legislators truly wanted to ensure that the maximum amount of surplus funds reached the rightful claimants, they would stop worrying about finders and they would repeal the provision that calls for the funds to revert to the county after 3 years.

Why not send the funds to the unclaimed funds office so the claimants have a chance to collect them after 3 years?  That would be a tough one to answer for the politicians who just called for this “benevolent” change in the law.

Be sure to comment below – why would legislators make it harder for surplus funds claimants to learn about their surplus – and continue the clause that allows the counties to keep all surplus funds that aren’t collected quickly?

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Comments (14)

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  1. hakchinoy says:

    Why would someone who bought the deed from the previous owner of record also be restricted to that 10%?

  2. Rick says:

    Latest News: You have to claim the funds with court order only, even if you record a deed to the property before the tax deed is issued.

    The only way to collect administratively now in Indiana is to be the owner when the actual tax lien is initially sold.

    • Nina Mincey says:

      Can the new owner of the tax deed claim the surplus money?

      • Rick Dawson says:

        No, the buyer at the sale who becomes the new owner, cannot claim the surplus. This would in effect, allow any buyer to get the property for the minimum bid if they had enough cash.

        Only the former owner and sometimes lienholders of the property can get the money.

        If the property changes hands before the sale, the last owner of record can still usually get the surplus even if they just got the property deed recently.

  3. Heather says:

    Here is my question then. I was told that you cannot file with the court, unless you are an attorney. That then means, that there would be literally no room for profit, if you have to also then hire an attorney to represent you to collect the 10%. Am I wrong about that?

    • Rick says:

      The attorney’s fees aren’t the big deal, it’s the 10%.

      Instead of getting a finder fee, like we used to, we BUY the claim a discount. And, most of the payment is contingent upon us being able to collect as the new owner of the claim.

      Now there are no fees anywhere in sight, just “buying money at a discount”.

      We laid out the whole strategy in our recent course “Claimgrabber Strategies” – http://www.claimgrabber.com

  4. Sam says:

    Rick,

    I reviewed your website and am interested in finding out more about the Claimgrabber strategy you use, but when I wanted to know more it takes me instead to some foreclosed property deal? Can you e-mail me please and let me know if you can still help me out with the UC property strategies, legal docs etc. that you use. Thanks!

  5. Warren Smith says:

    Is that Indiana law still on the books?

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