How to Recover Surplus Funds in Hempstead County, Arkansas: County-Level Guide

When a property is sold at a tax sale in Arkansas, and the sale price exceeds the total amount of taxes, penalties, interest, and costs due, the remaining money is known as "surplus funds" or "excess proceeds." These funds rightfully belong to the former owner of the property or, in some cases, to lienholders. Recovering these funds can be a complex process, requiring careful attention to county-specific procedures and state laws. This guide focuses specifically on how to navigate the recovery process within Hempstead County, Arkansas.

Understanding the Tax Sale Process in Arkansas

In Arkansas, properties with delinquent taxes are certified to the Commissioner of State Lands (COSL) after a period of delinquency. The COSL then conducts tax sales, typically online, to sell these properties. When a property sells for more than the amount owed, the surplus funds are held by the COSL, not directly by the county. However, understanding the county's role in identifying delinquent properties and the initial stages of the process is crucial.

Which County Office Handles Delinquent Property Information?

While the Commissioner of State Lands handles the actual tax sales and holds the surplus funds, the initial stages of tax delinquency and property assessment are managed at the county level. In Hempstead County, the County Collector is responsible for collecting property taxes, and if taxes become delinquent, they certify those properties to the Commissioner of State Lands. The County Assessor is responsible for valuing properties, and the County Clerk maintains property records and can provide information regarding ownership and recorded liens. For information about delinquent properties that have been certified to the state, you would primarily interact with the Hempstead County Collector's office for historical payment records, but for the actual surplus funds, the state (COSL) is the holder.

How Hempstead County Publishes Delinquent Property Lists

Hempstead County, like other counties in Arkansas, is required to publish lists of delinquent properties. This is typically done annually in local newspapers of general circulation. The primary purpose is to notify property owners that their taxes are delinquent and that their property is subject to certification to the state for tax sale. These lists generally appear in the Hope Star or other local publications. While the county publishes initial delinquency lists, the official list of properties certified for tax sale and the actual surplus funds generated are managed by the Commissioner of State Lands' office. The COSL website is the authoritative source for tax sale information and surplus funds lists for properties across the state, including those originating from Hempstead County.

Recovering Surplus Funds: The State-Level Process for Hempstead County Properties

Since the Commissioner of State Lands holds the surplus funds from tax sales in Arkansas, the claim process is primarily handled at the state level, following state statutes, even for properties located in Hempstead County.

Local Information Gathering

Before initiating a claim with the COSL, it can be beneficial to gather information from Hempstead County offices:

• Hempstead County Assessor's Office: To verify property descriptions and ownership history.
• Hempstead County Clerk's Office: To review recorded deeds, mortgages, and other liens that might affect priority of claims.
• Hempstead County Collector's Office: To confirm tax payment history and the year of delinquency leading to the tax sale.

While these offices do not process surplus fund claims, the documents they hold are crucial for substantiating your claim with the state.

State-Level Claim Procedure (Applicable to Hempstead County Properties)

The Commissioner of State Lands (COSL) has a specific process for claiming surplus funds. This process applies uniformly to all properties sold statewide, including those from Hempstead County.

1. Identify Surplus Funds: The COSL maintains an online database of properties sold and any associated surplus funds. You will need to search this database using the property's legal description or parcel number, which you can obtain from Hempstead County records.
2. Obtain Claim Forms: The COSL provides specific claim forms for former owners and lienholders. These forms are available on the COSL website.
3. Required Documentation: Typically, you will need to provide:
   • A completed claim form.
   • Proof of identity (e.g., copy of driver's license or state ID).
   • Proof of ownership at the time of the tax sale (e.g., recorded deed).
   • For lienholders, proof of the lien (e.g., recorded mortgage, judgment, or deed of trust).
   • Any other documentation requested by the COSL to establish your right to the funds.
4. Notarization: Claim forms and certain supporting documents often require notarization to verify the claimant's identity and signature.
5. Filing: All claims and supporting documentation must be mailed or delivered to the Commissioner of State Lands office in Little Rock, Arkansas. There is no direct filing of surplus fund claims at the Hempstead County level.

Statute of Limitations

Arkansas law dictates a specific timeframe within which surplus funds must be claimed. According to Arkansas Code Annotated § 26-38-604, any excess proceeds (surplus funds) from tax sales that are not claimed by the owner or lienholder within three (3) years from the date of the sale are forfeited to the state. This statute applies to all properties sold by the COSL, including those that originated from Hempstead County. It is critical to initiate the claim process well within this three-year window.

Priority of Claims: Lienholders vs. Former Owners

When surplus funds exist, there's a clear hierarchy for who receives them. Arkansas Code Annotated § 26-38-603 outlines this priority:

1. Lienholders: Valid lienholders (e.g., mortgage holders, judgment creditors) whose liens were recorded before the tax sale have priority to claim the surplus funds up to the amount of their outstanding lien. They must provide proof of their recorded lien and the outstanding balance.
2. Former Owner: After all valid lienholders have been paid, any remaining surplus funds are disbursed to the former owner(s) of the property at the time of the tax sale.

It is common for lienholders to claim surplus funds, especially if the property had a mortgage. Former owners should be aware that their claim might be reduced or eliminated if there are prior, valid liens against the property.

Assignment Contracts

Assignment contracts, where the former owner assigns their right to claim surplus funds to a third party (often for a fee), are common. While generally permissible under contract law, the COSL will scrutinize such assignments to ensure they are valid and properly executed. The assignee must typically provide the original assignment agreement along with the former owner's claim form and documentation, demonstrating a clear chain of title to the funds.

Common Pitfalls Specific to County-Level Information Gathering

While the claim process is state-level, issues at the county level can complicate matters:

• Outdated Records: County records, especially older ones, may not be fully digitized or easily accessible. Patience and persistence may be required when researching ownership and lien history at the Hempstead County Clerk's or Assessor's office.
• Misidentification of Property: Ensuring you have the correct legal description and parcel number from Hempstead County is paramount. A small error can lead to searching for the wrong property or filing an invalid claim.
• Lack of Public Awareness: Many former property owners in Hempstead County may not be aware that surplus funds exist or how to claim them, relying on local, rather than state, information sources.
• Difficulty Proving Ownership/Lien: If deeds or lien documents were never properly recorded or are missing, proving your claim to the COSL can be challenging. Thorough research at the Hempstead County Clerk's office is essential.

Conclusion

Recovering surplus funds from a tax sale in Hempstead County, Arkansas, requires understanding that the claim process is centralized through the Commissioner of State Lands. While Hempstead County offices provide crucial historical property and lien information, the actual claim is filed with the state. Adhering to the state's procedures, providing comprehensive documentation, and respecting the three-year statute of limitations are vital for a successful recovery. Always consult with the COSL's official resources and consider seeking legal advice if your situation is complex.

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Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. The process for recovering surplus funds can be complex, and laws are subject to change. It is recommended to consult with a qualified legal professional for advice tailored to your specific situation.