California Surplus Funds: Your Rights to Excess Proceeds, Answered

Short answer first, because this is the question everyone actually has: if a California county sells your tax-defaulted home at auction for more than you owed, the extra money is called excess proceeds, and it belongs to you, not the county. You have one year from the date the tax collector's deed is recorded to file a claim. You can file it yourself for free, or you can let someone else file it for you. Both are legal. The rest of this page walks through exactly how that works, using the actual statute, not a paraphrase.

California surplus funds law is one of the most agent-friendly systems in the country. Unlike states where a claim has to come from the property owner or a licensed attorney, California's own tax code spells out how a third party can file on someone else's behalf. That permissiveness is the reason this page is built around the questions people actually ask, instead of a generic step-by-step.

When a county treasurer-tax collector auctions off a tax-defaulted property, the sale has to cover the unpaid taxes, penalties, and costs first. If the winning bid is higher than that amount, the leftover money is called excess proceeds. It sits in the county's delinquent tax sale trust fund, and under Rev. & Tax. Code § 4674, it stays there until a party of interest claims it under the process in § 4675.

This is different from foreclosure surplus in states where a bank forecloses on a mortgage. California has that process too, under Civil Code § 2924j, which covers surplus from a non-judicial trustee's sale. But the bigger, more consistent volume of California surplus money comes from tax-defaulted property sales, which is why this guide focuses there.

Rev. & Tax. Code § 4675 lays out the payout order in plain terms:

• Lienholders of record before the tax deed was recorded, in order of priority.
• Any person with title of record to the property before the tax deed was recorded. In most residential cases, that second category is the former homeowner. If there was a mortgage or a lien still open at the time of the sale, that gets paid first. What's left goes to the last titled owner.

This is the part of California law that sets it apart from most other states. Under Rev. & Tax. Code § 4675(c), "any person or entity who in any way acts on behalf of, or in place of, any party of interest" can file the claim, as long as that person submits proof, along with the claim, that two things were disclosed to the owner: the amount and source of the excess proceeds, and the owner's right to file for it directly with the county at no cost.

Compare that to Georgia, where several counties flatly refuse to deal with anyone but the owner or a Georgia-licensed attorney, and won't recognize a power of attorney at all. California went the opposite direction. It wrote the agent relationship directly into the statute and just required honesty about it. That's a meaningful difference if you're the one being contacted about money you didn't know existed, because it means the person calling you is operating inside a legal framework, not around one.

There are two distinct paths, and Los Angeles County's own claim packet spells out the difference clearly (LA County Claim Form and Instructions):

• Assignment of Right to Collect Excess Proceeds. The owner transfers their claim to someone else entirely. When approved, the county issues the check in both names.
• Authorization for Agent to Collect Excess Proceeds. The owner keeps the claim in their own name and appoints someone to file and collect on their behalf. Both forms require the same disclosure under § 4675(c): a written statement, under penalty of perjury, that the owner was told they could have filed for free themselves. If that disclosure is missing, the assignment has no legal effect under § 4675(b).

The claim itself must be postmarked on or before the one-year expiration date to count as timely. That's not a soft guideline, it's written directly into § 4675(a)(2).

Los Angeles County processes some of the highest volume of tax-defaulted property auctions in the state, and its Treasurer and Tax Collector publishes the clearest paper trail of any county reviewed for this guide. Every claim, whether filed by the owner, an assignee, or an agent, goes through the Tax Defaulted Land Unit and needs the following (LA County Claim Form and Instructions):

• A completed claim form naming the parcel, sale number, and amount claimed
• Notarized signature under penalty of perjury
• A clear copy of valid, unexpired photo ID
• Original or certified proof of ownership, such as the recorded deed
• If an agent or assignee is involved, the matching form (Assignment of Right or Authorization for Agent) plus the written disclosure that the owner could have filed for free

The form and full instructions are public documents, mailed to the county at 225 North Hill Street, Room 130, Los Angeles, CA 90012, Attn: Tax Defaulted Land Unit. The county also confirms directly on its own site that "parties of interest can file claims, without fees, directly" and that state law separately "allows parties of interest to designate agents, who may require fees to file claims on their behalf" (LA County Notice of Excess Proceeds). That's the same permission structure written into § 4675(c), just stated in plain county language instead of statute language.

One thing worth knowing if you're the one filing: excess proceeds sitting in the trust fund don't earn interest for the claimant while they wait, a rule tied to a California appellate decision, Hodges v. Placer County, reflected in the state's own guidance to tax collectors (California State Controller's Office, Excess Proceeds guide). What you're owed the day the deed is recorded is what you get, whether the claim gets paid in month two or month eleven.

As of today, there is no enacted statewide cap on what an agent or assignee can charge for helping file a California excess proceeds claim. Rev. & Tax. Code § 4675 requires the disclosure described above, but it doesn't set a percentage.

That's likely changing, but it hasn't changed yet. Assembly Bill 2705, introduced by Assemblymember Diane Dixon, would cap third-party fees at 10% of the excess proceeds awarded, ban collecting any fee before a claim is approved and paid, and require a written agreement disclosing the consumer's right to file directly at no cost. As of this writing, the bill has passed the Assembly and is sitting in Senate committee, with a scheduled hearing canceled at the author's own request in June 2026. It has not been signed, and it is not law. If it eventually passes, the 10% cap and upfront fee ban wouldn't take effect until agreements signed on or after January 1, 2027, so for anyone filing now, no state cap applies.

That gap matters both ways. An agent can currently negotiate whatever fee the owner agrees to in writing, and an owner should ask exactly what percentage they're being asked to pay before signing anything. The county won't police that number for them, unlike Florida's 12% cap or Indiana's 10% cap.

If you've read anything about surplus funds in other states, you may have come across the Georgia problem: several counties there won't even talk to an agent or a power-of-attorney holder, full stop, and require a Georgia-licensed attorney for any third-party involvement. Nothing like that exists in California's statute. The state built the agent relationship in on purpose, then attached a disclosure requirement instead of a ban. That's a legislative choice, and it's the reason California is one of the more workable states in the country for this kind of claim, whether you're doing it yourself or working with someone who does this for a living.

For comparison on how other states structure the same basic idea, see how Florida handles foreclosure and tax deed surplus, a state where the fee an assignee can charge is capped by statute at 12%, unlike California's current no-cap situation. It's also worth understanding how tax lien states differ from tax deed states before assuming California's rules apply somewhere else, since Georgia's excess funds process works nothing like this. If you're comparing statutory fee caps state by state, our overview of surplus funds fee caps by state breaks down where California sits today and how that could change once AB 2705 resolves.

Excess proceeds amounts vary by property and county, but they're not small numbers. Los Angeles County's Tax Defaulted Land Unit runs a handful of large public auctions each year rather than a constant weekly drip, and its excess proceeds notices routinely list individual parcels with five- and six-figure amounts sitting in the trust fund. That happens because a distressed property with real equity can sell for well above the delinquent tax debt once bidders compete at auction. That's why the one-year clock and the disclosure rule both exist: real money, tied to real deadlines, sitting in a county account until someone files the paperwork correctly.

I've spent over 13 years working surplus funds and excess proceeds cases nationwide, and helped recover more than $100 million across over 2,000 cases. California's tax-defaulted property system is one of the more active and transparent ones in the country to work, precisely because the statute is this specific about who can file and what has to be disclosed.

If you want to see how this process actually works end to end, join the free Surplus Funds Masterclass at surplusfunds.ai, or join the free Surplus Funds Collective community on Skool at skool.com/surplusfunds.