At Zimmer & Rens LLC, we are property tax foreclosure lawyers serving all of Wisconsin. In this article, we’ll explain how you can claim back the surplus sale proceeds from your tax-foreclosed property and what legal changes have made this possible.

Understanding Property Tax Foreclosures and Equity Recovery

If you don’t pay your property tax bills, the government has the legal right to foreclose on your property. However, many property owners are unaware that they may still have equity in the foreclosed property that legally belongs to them. Here’s an example:

• Suppose your property was foreclosed and sold at a government auction for $100,000.
• Your unpaid tax obligation was only $5,000.
• Until recently, the government would keep the full $100,000, even though only $5,000 was owed.

Under Wisconsin law, counties (or the City of Milwaukee, due to its size) can foreclose on a property for unpaid taxes, penalties, or special assessments. Once the government takes possession of the property, the government typically sells the property at auction to recover the unpaid taxes.

If the property is sold for more than the total amount owed, the government is now legally required to return the surplus sale proceeds to the former property owner.

Changes in the Law That Protect Property Owners

If you or someone you know lost a property due to tax foreclosure, you may have thousands, or even hundreds of thousands, of dollars waiting to be collected. Here’s why:

• In 2023, the United States Supreme Court ruled that it is unconstitutional for a government entity to keep the surplus proceeds from a tax foreclosure sale without just compensation. This ruling is based in the Takings Clause of the Fifth Amendment to the U.S. Constitution.
  
  
• Similarly, the Wisconsin legislature has passed laws requiring Wisconsin counties and the City of Milwaukee to return surplus sale proceeds to taxpayers after a tax lien foreclosure.

If your property was foreclosed on and sold, you should act quickly to recover your surplus funds. The government is only required to hold those funds for five years – after which they can legally keep them.

What If Your Property Was Taken Before the Law Changed?

If your property was taken and sold before Wisconsin’s new statutes were enacted, recovering your surplus funds will require filing a lawsuit under the Takings Clause of either the U.S. or the Wisconsin Constitution, just like the case in Minnesota that led to the Supreme Court ruling in 2023.

At Zimmer & Rens, LLC, we have filed a class-action lawsuit to recover unpaid surplus funds from tax foreclosures of properties that were seized from Wisconsin residents before these statutory changes.

This means that people whose property was foreclosed for unpaid property taxes before the new statutes went into effect can still fight to reclaim the surplus funds from the auction of their foreclosed property.

The lawsuit is called John Elliott, et al., v. State of Wisconsin, et al., and the lawsuit is currently pending in Waukesha County, Wisconsin, Case No. 25-CV-335.

If you or someone you know lost a property to unpaid property taxes, please contact Zimmer & Rens LLC to see if you are able to join into the lawsuit or if you could benefit from the lawsuit.

How to Claim Your Surplus Funds

If you’ve lost a property due to unpaid property taxes, don’t wait – contact us as soon as possible. We can help determine if you have uncollected money from a tax foreclosure that you are entitled to, and we can assist you in making your claim.

At Zimmer & Rens LLC, we are committed to helping Wisconsin property owners protect their real estate interests and recover the funds that are rightfully theirs.