Arkansas Tax Foreclosure
Prevention

Arkansas provides a structured process for former property owners to recover surplus funds from tax foreclosure sales, governed primarily by Section 26-37-205 (Distribution of Funds). The Commissioner of State Lands oversees the sale of tax-delinquent properties and the distribution of any remaining funds. Arkansas law includes specific provisions regarding claim procedures, fee limitations (capped at 10% for recovery agreements), and escheatment timelines. Former owners have approximately one year to collect overages, after which funds held in escrow for three years escheat to the county. This whitepaper provides a comprehensive guide to the surplus fund recovery process in Arkansas. Note: This guide reflects information current as of April 2026. Tax foreclosure laws are actively evolving following the landmark Tyler v. Hennepin County Supreme Court decision (2023). Always verify current statutes and consult with a licensed attorney before taking action.

In Arkansas, when property owners fail to pay their property taxes, the land becomes tax-delinquent and may ultimately be sold by the Commissioner of State Lands. The process involves several stages: 1. Tax delinquency: The property owner fails to pay property taxes, and the property is certified as tax-delinquent. 2. Commissioner of State Lands: The Commissioner takes custody of the tax-delinquent property and manages the sale process. 3. Sale: The property is sold, and the proceeds are collected. 4. Distribution: The Commissioner distributes the proceeds according to the statutory framework, first covering administrative costs and taxes, then distributing any remaining funds. At the county level, tax delinquency is handled by the County Tax Collector. For sales conducted by the Commissioner of State Lands, that office manages the entire process from sale through distribution of surplus funds. For mortgage foreclosure sales, the process is different and governed by Section 18-50-109, which directs the trustee or mortgagee to distribute proceeds in order: first to sale expenses, then to the indebtedness, then to junior lienholders, and finally any surplus to the grantor or their successor in interest.

Under Section 26-37-205, after the Commissioner of State Lands takes a 10% administrative fee (up to a maximum of $500), the remaining surplus funds are to be paid to the former owners of the tax-delinquent land. Arkansas law defines "former owner" specifically: - A person, partnership, corporation, or other legal entity capable of owning real property in Arkansas - That holds record title to the real property on the date of sale by the Commissioner of State Lands - Importantly, "former owner" does NOT include heirs or relations beyond the first degree of consanguinity This narrow definition means that only the actual record title holder at the time of sale (and very close relatives) can claim the surplus. More distant heirs or relatives are excluded. The former owner must file an application with the Commissioner of State Lands requesting the release of funds. The application requires proof of ownership and proof of authority to act on behalf of the owner. The Commissioner may require additional information as deemed necessary. As a condition of receiving the surplus, the former owner must release and relinquish all rights, title, and interests in the tax-delinquent land by executing a release deed provided by the Commissioner.

Arkansas surplus fund recovery is governed by several statutes: - Section 26-37-205: "Distribution of Funds." The primary statute for tax sale surplus distribution. Key provisions: - Subsection (b)(1): Commissioner retains 10% up to $500 for administration - Subsection (b)(2): Remaining funds paid to former owners - Subsection (b)(2)(F): Fee agreements for recovery assistance are limited to 10% - Subsection (b)(2)(I): All funds must be made payable to the former owner; no funds to any other person without a court order - Subsection (b)(3): Escheatment timelines — 5 years for pre-July 2005 escrow funds, 3 years for post-July 2005 escrow funds - Section 18-50-109: "Disposition of Proceeds of Sale." Governs mortgage foreclosure surplus distribution: - First to expenses and attorney's fees - Second to indebtedness owed - Third to junior lienholders in order of priority - Fourth, surplus to the grantor or successor in interest Key contact offices: - Tax sale overages: Commissioner of State Lands, County Tax Collector - Mortgage foreclosure overages: Sheriff/Clerk, Trustee's Office In Tyler v. Hennepin County (2023), the U.S. Supreme Court ruled unanimously that governments cannot keep surplus proceeds from tax sales beyond what is owed, finding this violates the Takings Clause of the Fifth Amendment. This landmark ruling has strengthened property owners' rights to surplus funds nationwide.

The claim process in Arkansas is administered through the Commissioner of State Lands: 1. Obtain the application: The Commissioner of State Lands provides the official application form for requesting the release of surplus funds. 2. Complete the application: Provide all required information including: - Proof of ownership of the tax-delinquent land at the time of sale - Proof of authority to act on behalf of the owner (if applicable) - Any additional information the Commissioner deems necessary 3. Execute the release deed: The Commissioner provides a release deed that the former owner must execute, relinquishing all rights, title, and interests in the tax-delinquent land. 4. Submit the application: File the completed application with the Commissioner of State Lands. 5. Receive payment: If approved, all funds are made payable directly to the former owner. Under Section 26-37-205(b)(2)(I), no funds shall be made payable to any other person or entity without a court order. 6. No interest: Note that no interest is paid to the former owner on the funds held. Important warnings from the statute: - Anyone filing a claim or assisting with a claim that results in erroneous payment is responsible for repayment of all funds paid. - Fraudulent claims are punishable as a Class D felony. - Disputes, multiple claims, or ownership controversies may require a court order to resolve.

Arkansas has specific deadlines for surplus fund claims: - One year: The general timeframe to collect tax sale overages before additional complications arise. - Escheatment timelines: - Funds placed in escrow before July 1, 2005: Held for 5 years, then escheat to the county where the property is located. - Funds placed in escrow on or after July 1, 2005: Held for 3 years, then escheat to the county where the property is located. - Mortgage foreclosure overages: Also subject to a 1-year collection period. Once funds escheat to the county, they become the property of the county and are significantly more difficult — if not impossible — to recover. It is critical to file claims well within the applicable time periods. All funds distributed to counties from the redemption or sale of tax-delinquent lands are distributed to the applicable taxing units in the proportion that taxes would have been distributed if collected in the year due.

AuctionBlock.org is a mission-driven company that helps former property owners recover surplus funds — for a flat $2,000 fee upon successful recovery. Arkansas's 10% fee cap on recovery agreements demonstrates the state's intent to protect former owners from excessive charges. AuctionBlock.org goes further by charging nothing at all. Here is how we can help with Arkansas surplus fund recovery: - Free surplus fund searches: We help you determine whether surplus funds exist from the sale of your tax-delinquent property. - Application assistance: We guide you through the Commissioner of State Lands application process, helping you complete the paperwork correctly. - Documentation support: We help you gather the required proof of ownership and other documentation. - Process explanation: We explain the release deed requirement and other steps so you know exactly what to expect. - Deadline monitoring: We help ensure you file within the applicable time limits to avoid escheatment. - Legal referrals: For complex cases involving disputed claims or multiple claimants, we connect you with attorneys experienced in Arkansas property law. Remember: under Arkansas law, all funds must be made payable directly to you, the former owner. No one can receive your funds without a court order. AuctionBlock.org respects this protection and works to ensure you receive every dollar you are entitled to. Contact AuctionBlock.org today. Our services are free, and we are committed to making sure surplus funds go to the people they belong to — not to the government.