Ohio sells tax liens to private individuals, which can later be foreclosed upon. When they are foreclosed upon any excess funds are recoverable as “overages” from the county treasurer which is the party who holds them. The excess funds one needs to ask about from the county treasurer or county auditor would be excesses from a private tax foreclosure. I say private tax foreclosure because Ohio sells tax liens to private parties who can later foreclose on the tax liens if they are unpaid.
If excess funds from a private foreclosure pursuant to tax liens are not claimed within 3 years then the funds are simply forfeited to the county. What one is running into on the subject of finder registration and regulation is with respect to another class of unclaimed funds. Those are funds that are held by the state director of commerce. The overages funds from tax foreclosures are not held by the state director of commerce they are held by the county treasurer.
Monies get to the state director of commerce when they are reported to the state director of commerce (and remitted to him). There is no requirement for the State to issue a report to the director of commerce on the excess. Because the funds are never reported to the director of commerce they never become “unclaimed funds” and subject to the need to register as a “finder” in Ohio. Instead the monies stay at the County level and are forfeited at that level. So the finder registration laws never apply.
The Way Tax Foreclosures Work in Ohio
A certificate holder (someone who has bought a tax lien at a tax lien sale) can file a request for foreclosure with the county treasurer. ORC Title 57, 5721.37(A) (Legal citation).
After all statutorily required distributions are completed, any residue of money from proceeds of the sale shall be disposed of as prescribed by section 5721.20. ORC Title 57, 5721.39. That means that excess funds belong to the former owner. These are “overages” we teach about in Overages Blueprint.
With some exceptions, any residue of moneys from the sale or foreclosure of lands remaining belong to the owner, and if unclaimed by such owner within 60 days from its receipt, shall be paid to the county treasurer and shall be charged separately to the county treasurer by the county auditor, in the name of the supposed owner. The treasurer shall retain such excess in the treasury for the proper owner of such lands upon which the foreclosure was had, and upon demand by such owner, within three years from the date of receipt, shall pay such excess to the owner. If the owner does not demand payment of the excess within three years, then the excess shall be forfeited to the delinquent tax and assessment collection fund created under section 323.261 of the Revised Code, or in counties that have established a county land reutilization corporation fund under section 323.263 of the Revised Code. ORC Title 57, 5721.20
Legal Discussion of Unclaimed Funds
“Unclaimed funds” is a term of art with a particular definition in Ohio, and the term DOES NOT include excess funds from a tax foreclosure. What the term does mean in Ohio is any moneys, rights to moneys, or intangible property, described in section 169.02, when as shown by the records of the holder, the owner has not, within the times provided in section 169.02, taken any of a specific set of actions.
ORC Title 1, 169.01. All moneys, rights to moneys, or other intangible property held or owed in this state or held for or owed to an owner whose last known address is within this state, by the United States government or any state, as those terms are described in division (E) of section 169.01 of the Revised Code, unclaimed by the owner for three years, excluding any property in the control of any court in a proceeding in which a final adjudication has not been made. ORC Title 1, 169.02(K). All holders of “unclaimed funds” to report to the director of commerce with respect to the unclaimed funds as provided in this section. 169.03(A)(1).
A key concept is that the overages fund from a tax foreclosure sale are never given to the director of commerce and are never defined as “unclaimed funds” and in working with these funds one does not need to register with the State of Ohio as a “finder.” One would need to register with the State of Ohio if working with funds held by the director of commerce at the state level (items such as lost bank accounts, uncashed refund checks). Here is why the funds never get to the director of commerce and thus are never “unclaimed funds” under Ohio law.
If surpluses from foreclosures brought about by holders of tax certificates were to generate funds which the owner did not claim, or perform any other action as described in ORC 169.01, then the holder would need to retain those funds for 3 years before issuing a report to the director of commerce. However, ORC 5721.39 instructs any residue funds not claimed by the owner within 60 days to be paid directly to the county treasurer; the county treasurer will retain such excess in the treasury for the owner for three years from the date of receipt. If the owner does not demand payment within that three years' time, then the excess shall be forfeited, rather than reported to the director of commerce.
More on Why One Does Not Have to Register as a Finder
The requirement to file as a "finder" is under 169.16: No person, on behalf of any other person, shall engage in any activity for the purpose of locating, delivering, recovering, or assisting in the recovery of unclaimed funds or contents of a safe deposit box, and receive a fee, compensation, commission, or other remuneration for such activity, without first having obtained a certificate of registration from the director of commerce in accordance with this section.
169.16 requires a person register as a finder when dealing with "unclaimed funds." This term is defined under 169.02 as a list of specific types of 'unclaimed' in the layman's sense-of-the-word. We both understand OH law to give these types of funds a three-year 'holding' period before they become unclaimed. Therefore, I have not found a requirement to register as a finder before trying to help an owner get their property.
As part of our research we contacted the Ohio Division of Unclaimed funds, at 877-644-6823 to check. Our researcher spoke with Stacey Adams, at the division of unclaimed funds--she is the new 'expert' on this over at the state of Ohio.
She agreed with our research. She is not familiar with any tax sale surpluses even becoming "unclaimed funds" subject to the Finder's provisions--that she believes those unclaimed amounts would likely remain on a county level, or subject to county administration. She emphasized that different classes of property were subject to different levels of due diligence on the part of the holder, and different time periods before the holder was obligated to report those funds as "unclaimed," which matches our understanding. She said they do not received excess proceeds from tax sales.