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Surplus Recovery Fee Caps and Licensing

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Surplus Recovery Fee Caps and Licensing

Cross-jurisdiction doctrine page. Legal information, not legal advice. Last verified: 2026-06-10. Verify every cited statute against the linked primary source before acting — surplus-recovery law is changing fast in the wake of tyler-v-hennepin-county.

What it is

When a property sells at a tax-foreclosure auction for more than the debt plus costs, the surplus-funds belong to the former owner and displaced lienholders. A surplus-recovery agent (also called a finder, locator, or asset-recovery firm) locates those owners, tells them money is waiting, and collects it on their behalf — typically for a percentage-based or assignment-based fee. Because the owner is usually uninformed and in a distressed position, states have enacted an uneven patchwork of statutes to limit those fees, require disclosures, mandate licensing, and in a few states effectively ban the contingent-fee model altogether.

This page maps the fee-cap and licensing layer of that patchwork. It is downstream of third-party-recovery-rules, which covers the full agent- regulation landscape including assignment timing, assignment validity, and cooling-off windows. This page focuses specifically on: how much an agent may charge, what license (if any) is required, and what disclosures must accompany a valid agreement.

▸ For Investors / Operators If you operate a surplus-recovery business, the table below is the compliance core: wrong-state or wrong-custody-stage fee quotes expose you to void agreements, criminal liability (CO, WA), CPA/UDAP enforcement, and AG investigation (IN). Note that in several states (CA, TX, OR) there is no flat fee cap — regulation runs through timing, assignment conditions, or disclosure instead.

▸ For Former Owners If a recovery agent approaches you, check this page to confirm whether your state caps their fee. In every state that routes unclaimed surplus to a State administrator (FL, NC, UT, HI, etc.), you can almost always file the claim directly at no cost; the agent is a convenience, not a requirement. The agent must generally disclose that right to you in a valid agreement.

The governing framework

There is no federal surplus-recovery agent licensing regime. Regulation is entirely state-level. Three distinct statutory layers may apply to the same transaction, and only one of them typically applies at any given custody stage:

  1. Tax-surplus-specific statutes — the clearest and most protective. These apply while the funds are held by the county treasurer, county auditor, or court registry. Examples: indiana (IC 6-1.1-24-7.5), texas (Tex. Tax Code § 34.04), nevada (NRS 361.610), washington (ESHB 1637/RCW 63.30.780), arkansas (Ark. Code § 26-37-205), north-carolina (G.S. §§ 116B-78/78.1).

  2. General unclaimed-property / RUUPA finder statutes — govern after the money has escheated to the State unclaimed-property administrator (usually after 1–5 years of no claim). Common cap: 10–25%, with a 24-month void window on agreements signed close to the escheat date. These caps do not govern the county-custody stage in most states.

  3. Consumer-protection / UDAP backstops — apply everywhere as a floor; “unconscionable” fees or deceptive practices are prohibited regardless of whether a specific cap exists.

The constitutional backdrop is tyler-v-hennepin-county, 598 U.S. 631 (2023) — the unanimous decision holding that retaining surplus equity above the tax debt is an unconstitutional taking. That decision created the surplus pools agents pursue and also accelerated state legislative reform of both the surplus-return mechanism and the agent-regulation layer.

The two-custody-stage trap

The most common operator error is applying the unclaimed-property finder cap to county-held surplus. The RUUPA finder cap only bites once the money has reached the State administrator. While the money sits with the county — the window in which most recovery deals are actually signed — the RUUPA cap either does not apply or is unsettled. States where surplus escheats to a county fund rather than the State administrator (CA, IN, MO, NV, SC, WA, and in NY to the tax district) may never be subject to a State RUUPA cap at all.

State-by-state: hard statutory fee caps (tax-surplus-specific)

The states below have an explicit percentage ceiling that applies in the county-held or court-held stage — i.e., before funds reach the State unclaimed-property administrator. These are the clearest, most operator-relevant limits.

Indiana — 10%, $50 threshold (IC 6-1.1-24-7.5)

Indiana Code § 6-1.1-24-7.5 (“Limitations on Agreements for Recovery of Money Deposited in the Tax Sale Surplus Fund; Enforcement by Attorney General”) caps compensation at 10% of the amount collected, provided the amount collected exceeds $50. The agreement is valid only if it also discloses: (a) the amount deposited in the tax sale surplus fund for that property, and (b) the owner’s net share after the fee.

Enforcement rests with the Indiana Attorney General’s Homeowner Protection Unit (IC § 4-6-12). The AG may maintain a court action and seek civil penalties plus reimbursement of investigation and prosecution costs.

Texas — attorney fee ≤ 25% or $1,000; 36-day/80%/125% regime (Tex. Tax Code § 34.04)

Texas does not impose a flat cap on non-attorney recovery agents. Instead it erects structural guardrails that restrict the economics of assignment-based recovery:

  • Attorney-fee cap: A fee charged by an attorney to obtain excess proceeds may not exceed the lesser of 25% of the amount obtained or $1,000. (Tex. Tax Code § 34.04(i).)
  • Assignment waiting period: An assignment or transfer is invalid if executed before the 36th day after excess proceeds are deposited in the court registry. (§ 34.04(f)(1).)
  • Minimum payout to owner: On the assignment date, the assignee must pay the owner at least 80% of the claim value. (§ 34.04(f)(4).)
  • Anti-solicitation: No assignment may result from an in-person or telephone solicitation. (§ 34.04(f)(3).)
  • Assignee recovery cap: The court may not order the assignee paid more than 125% of what the assignee paid the owner. (§ 34.04(j).)

Practical effect: a non-attorney operating an assignment model keeps at most 20% of the face value (owner receives ≥80%), and if the spread is re-traded, the court caps the total recovery at 125% of cost.

Nevada — 10% for primary-residence sales (NRS 361.610)

Nevada caps recovery-agent fees at 10% of the remaining excess proceeds in one specific context: the former owner is a natural person and the sold property was that person’s primary residence at the time of sale. The statute requires the agreement to be in writing and signed by the owner.

For non-primary-residence surplus (investment properties, commercial parcels), no tax-surplus-specific cap is imposed by NRS 361.610; the State unclaimed-property framework may apply after escheat.

Washington — 5%, misdemeanor (ESHB 1637, 2023)

Washington’s ESHB 1637 (2023) imposes the tightest hard cap in the country on a tax-surplus-specific basis. The statute makes it unlawful to seek, receive, or contract for a fee exceeding 5% of the value thereof returned to the owner for locating or purporting to acquire the right to recover funds held by a court or county that are proceeds from a foreclosure. The cap applies to both judicial and non-judicial foreclosure surplus.

Criminal penalty: Any violation is a misdemeanor; the fine must be at least the amount charged, and up to 10 times that amount, or imprisonment up to 30 days, or both. Violations are also unfair or deceptive acts under the Washington Consumer Protection Act (RCW 19.86).

The broader locate-agreement disclosure rule — written, signed, stating the value before and after the fee — is at RCW 63.30.780 (the RUUPA locate-agreement provision, effective 2022).

North Carolina — 20% / $1,000 dual cap; PI license + Treasurer registration (G.S. §§ 116B-78, 116B-78.1)

North Carolina’s unclaimed-property finder statute reaches “surplus funds in a special proceeding,” covering tax and mortgage foreclosure surplus. The cap is the lesser of 20% of the recovered amount or $1,000 for standard agreements. For heir-locator agreements under G.S. § 28A-22-11, the cap is 20$1,000 alternative.

Licensing: Since January 1, 2022, a property finder must hold (a) an annual registration with the NC State Treasurer under G.S. § 116B-78(f), and (b) a private investigator license from the NC Private Protective Services Board under Chapter 74C. Filing a claim before obtaining a valid signed agreement voids the registration for up to one year. (G.S. § 116B-78.1.)

24-month void window: Agreements signed between the date the property was distributable and the date 24 months after delivery to the Treasurer are void.

Arkansas — 10%, disclosure of before/after value required (Ark. Code § 26-37-205)

Arkansas Code § 26-37-205 (“Distribution of funds — Definition”) caps a recovery agent’s fee at 10% of the remaining funds and requires the agreement to state the value before and after the fee is deducted. The Commissioner of State Lands retains 10% (up to $500) of the remaining funds for administration — a deduction separate from any agent fee.

State-by-state: disclosure-only / no flat cap (tax-surplus-specific)

California — no fee cap on county-held excess proceeds; disclosure required (Cal. RTC § 4675)

California Revenue and Taxation Code § 4675 imposes no percentage cap on fees charged by a recovery agent acting for a claimant at the county stage (i.e., while the excess proceeds are held by the county board of supervisors after a tax-defaulted property sale). The statute instead requires:

  1. Proof of disclosure filed with the claim: Any person acting on behalf of a party of interest must submit proof that the amount and source of the excess proceeds have been disclosed to the party, and that the party has been advised of their right to file the claim directly at no cost.
  2. Assignment conditions: An assignment of the right to claim excess proceeds is valid only if made via a dated, written instrument that explicitly states the right is being assigned, after mutual disclosure of all material facts about the value of the right. Non-compliant assignments are void. Effective January 1, 2025.

Note: California’s 10% unclaimed-property heir-finder cap (CCP § 1582) applies only to State Controller-held funds and does not govern county-held tax excess proceeds. Do not conflate the two regimes.

Florida — two-regime split (Fla. Stat. §§ 197.582, 45.033, 717.135, 717.1400)

Florida has three overlapping surplus-agent regimes, and the applicable cap turns on the custody stage and the underlying proceeding type:

1. Tax-deed surplus (§ 197.582, county clerk stage): While held by the clerk, § 197.582 contains no fee cap for recovery agents. Claimants have 120 days from notice to file. After 120 days, a conclusive presumption runs in favor of the titleholder and the clerk moves the funds to Chapter 717.

2. Mortgage-foreclosure surplus (§§ 45.032–45.033, court stage): A voluntary assignment of the right to surplus funds is valid only if the transferee’s total compensation does not exceed 12% of the surplus. (§ 45.033(3)(d).) The agreement must be filed with the court within 60 days of the certificate of disbursements and must disclose all consideration, the property value, approximate debt and equity, and a statement that the owner needs no representative to recover surplus. (§ 45.033(3).)

3. Chapter 717 unclaimed-property stage (after escheat): Once surplus escheats to the Florida Department of Financial Services under Chapter 717, a representative (attorney, CPA, or Class “C” licensed PI — registered under § 717.1400) may use only Department-approved agreement forms. The fee cap under § 717.135 is 30% of the claimed amount; if a recovery agreement exceeds 30%, the overage is remitted directly to the claimant by the Department.

Practical summary for operators: the 12% cap governs mortgage foreclosure in the court; the 30% cap governs state-held unclaimed property after escheat; county-held tax-deed surplus has no statutory fee cap (but UDAP and common- law unconscionability apply).

State-by-state: recovery effectively prohibited

Colorado — fee agreements void; inducing one is a misdemeanor (HB16-1090; C.R.S. §§ 39-11.5-109, 38-38-111)

Colorado enacted HB16-1090 (2016) creating the most punitive fee-restriction regime outside of Washington. For tax foreclosure surplus held by the county treasurer, any compensation agreement is unenforceable during the trustee- custody period and the first 2 years of State treasurer custody. The agreement becomes enforceable only after 2 years at a rate ≤ 20% (rising to 30% if the funds remain unclaimed for 3+ years).

More significantly: inducing a property owner to enter into a void compensation agreement is a misdemeanor (up to 6 months, $10,000 fine, or both) and a deceptive trade practice under the Colorado Consumer Protection Act. A finder who solicits an agreement before the 2-year window is not merely holding a void contract — the act of solicitation is independently criminal.

The mortgage-foreclosure analog (overbid recovery agreement) is governed by C.R.S. § 38-38-111 with similar unenforceability language.

Oregon — direct-to-Treasury model; assignments of surplus claims (HB 2089, 2025)

Oregon HB 2089 (effective September 26, 2025, applying to foreclosures noticed on or after May 25, 2023) restructures Oregon’s tax-foreclosure surplus system to route surplus directly to the Oregon State Treasury unclaimed property program. The statute defines “claimant” narrowly (former owners of record) and the claim process flows through Treasury, not through a recovery agent.

The enrolled bill’s Section 9 establishes the direct Treasury claim process. The County Association commentary confirms that the statute’s claimant-eligibility language — requiring a direct former-owner relationship — effectively forecloses the standard contingent-fee recovery-agent assignment model, as the surplus goes to Treasury and must be claimed through the public process. (needs_verification: specific statutory language voiding assignments not independently confirmed from enrolled text; structural analysis only.)

Unclaimed-property finder caps (State-administrator-custody stage only)

The following caps apply only after surplus has been remitted to the State unclaimed-property administrator. They do not govern county-held surplus. The table records the cap, the void-window, and the primary statute.

JurisdictionUP finder capVoid windowPrimary cite
florida30% (recovery agrmt); 12% (mortgage-foreclosure surplus per § 45.033)none located in § 717.135Fla. Stat. §§ 717.135, 45.033
georgianone located in O.C.G.A. § 48-4-5 (commercial sites claim ~10%; unconfirmed) ⚠—O.C.G.A. § 48-4-5
hawaii25%void from abandonment until 24 mo after deliveryHRS § 523A-25
iowa15% (via ch. 556 unclaimed property; no tax surplus exists by design)≥24 mo windowIowa Code § 556.11(10)
louisiana10%⚠ (pre-reportable agreements prohibited)La. R.S. 9:177
maine10%void within 24 mo of delivery33 M.R.S. § 2179
massachusetts10%24-month unenforceability windowG.L. c. 200A § 13
north-carolina20% / $1,000 (dual cap; also applies to foreclosure surplus)24-month void windowG.S. §§ 116B-78, 116B-78.1
north-dakota10% (RUUPA; NDCC 47-30.2-68)24 moNDCC §§ 57-28-20, 47-30.2-68
utah20% (Title 67, ch. 4a); POA filed with claim may not carry a fee term24-month voidUtah Code Title 67 ch. 4a

States where the only known cap is a RUUPA/unclaimed-property finder cap (exact % still needs_verification for the tax-surplus stage): idaho, kansas, mississippi, south-dakota, wisconsin. Do not quote these percentages as applying to county-held surplus.

Licensing and registration matrix

JurisdictionLicense / registration requiredNotes
florida (Ch. 717 stage)Attorney (FL Bar), CPA (Board of Accountancy), or Class “C” PI license; registered with Dept. of Financial Services§ 717.1400; government-affiliation names prohibited
north-carolinaAnnual NC State Treasurer registration + NC PI license (Ch. 74C)Since 1/1/2022; both required; filing claim before signed agreement = suspension up to 1 yr
utahPI/private-detective license for contingent-fee finders; attorneys and CPAs exemptContingent-fee model requires PI license
iowaPI license (ch. 80A) to charge a fee for locating UPNo tax surplus by design; applies to unclaimed property only
pennsylvania ⚠Finder must register with PA Treasury + signed authorization (county practice)Both RETSL and MCTLA surplus; needs_verification on exact requirements
texasNo specific non-attorney recovery-agent licenseAttorneys are regulated by State Bar; non-attorney finders legally restricted (see § 34.04 economic structure)
indianaNo specific license; AG enforcement is civil/penaltyIC 6-1.1-24-7.5
arkansasNo specific license located ⚠Ark. Code § 26-37-205
nevadaNo specific license located in NRS 361.610 ⚠NRS 361.610
washingtonNo specific license (5% cap + CPA/misdemeanor police it)ESHB 1637
georgia ⚠Many county tax commissioners refuse to correspond with non-attorneys; no statewide license confirmedO.C.G.A. § 48-4-5 county-practice issue
michigan ⚠No recovery-agent license; exclusive MCL 211.78t court-motion process crowds out informal findersMCL 211.78t §(11)

How jurisdictions diverge — the operator’s typology

PatternStatesKey rulePrimary cites
Hard % cap, tax-surplus-specific, criminal or civil penaltywashington (5%, misdemeanor), colorado (void; inducement = misdemeanor/CPA), indiana (10%, AG/civil penalty), north-carolina (20%/$1,000, PI license)Most restrictive; the fee ceiling is in the tax/surplus statute and carries teethESHB 1637; IC 6-1.1-24-7.5; HB16-1090; G.S. 116B-78.1
Hard % cap, tax-surplus-specific, civil/voidtexas (attorney 25%/$1,000; assignee 80%-pay/125%-recover), nevada (10% primary residence), arkansas (10% disclosure required)Cap in tax or surplus statute; enforcement civil or through fee agreement voidTex. Tax Code § 34.04; NRS 361.610; Ark. Code § 26-37-205
Structural bar (not a % but effectively eliminates fee model)oregon (direct-to-Treasury, claimant definition forecloses assignment model)No flat % stated; architecture routes funds away from agent modelHB 2089 (2025)
Two-stage split: no cap at county stage; % cap after escheatflorida (12% for mortgage-court surplus; 30% for Ch. 717; no cap for tax-deed clerk stage), and many RUUPA statesMost complex; operator must track custody stageFla. Stat. §§ 45.033, 717.135, 197.582
No tax-surplus-specific cap; only RUUPA/UP cap after escheathawaii (25%), maine (10%), massachusetts (10%), iowa (15%), north-dakota (10%), utah (20%)Cap bites only at State administrator; county-stage deals may be unregulatedHRS § 523A-25; various RUUPA enactments
No located cap (needs_verification)georgia ⚠, michigan ⚠, ohio ⚠, tennessee ⚠, alabama ⚠, minnesota ⚠Absence of primary source confirming a cap ≠ no cap existsSee jurisdiction pages

Disclosure requirements: the common floor

Even where no percentage cap exists, nearly every jurisdiction with any regulation requires a written, signed agreement that:

  1. Identifies the property and the deposited amount (IN, AR, CA, NC, TX, WA).
  2. States the owner’s net share after fees (IN, AR, NC, WA/RCW 63.30.780).
  3. Advises the owner of the right to file directly at no cost (CA RTC § 4675(c), FL § 45.033(3), most RUUPA states).
  4. Does not result from in-person or telephone solicitation (TX § 34.04(f)(3)).

A valid agreement that meets these conditions is the industry baseline. An agreement that omits them may be void even where no fee cap would otherwise invalidate it.

The Georgia question (needs_verification)

georgia is the most-cited state where the cap question is genuinely unsettled. O.C.G.A. § 48-4-5 sets up a superior court interpleader process for excess funds but does not cap agent fees. Commercial recovery-agent marketing frequently claims “~10%” or “state law limits fees” in Georgia, but no retrieved primary statute or Georgia appellate case confirms a specific cap. The county practice layer (many Georgia tax commissioners refuse to deal with non-attorney finders) operates as an informal restraint, not a statutory cap. Until a primary source is retrieved, any fee-cap statement for Georgia is needs_verification.

  • Source retrieved (no cap in § 48-4-5 confirmed): O.C.G.A. § 48-4-5 via Justia (HTTP 403 on direct fetch; statutory text and interpleader structure confirmed via detailed web-search excerpt quoting the statute, 2026-06-10).

Leading cases

  • tyler-v-hennepin-county — 598 U.S. 631 (2023). The constitutional anchor: surplus equity above the tax debt belongs to the owner, not the government. The decision that created the surplus pools agents pursue and accelerated state legislative reform of the agent-regulation layer.
  • Auditor of Owen County v. Asset Recovery Inc., Ind. Ct. App. 2013 (applying IC 6-1.1-24-7.5; confirming the AG-enforcement structure). https://caselaw.findlaw.com/court/in-court-of-appeals/1639588.html (needs_verification: case citation confirmed via FindLaw listing; full text not independently retrieved.)

Practical playbook

For a recovery operator

  1. Identify the custody stage first. Is the money with the county treasurer / clerk / court registry, or has it escheated to the State administrator? The applicable cap changes at that transition.
  2. Look up the controlling regime for that state and stage in this table and on the jurisdiction page’s Module 3. Never assume the RUUPA cap applies to county-held surplus.
  3. Quote within the hard cap. WA: 5%. IN: 10%. AR: 10%. NV (primary residence): 10%. NC: 20%/$1,000. TX (attorney): 25$1,000; assignee: ≤125%/80% rule. FL (mortgage foreclosure court stage): 12%. FL (Ch. 717 state stage): 30%.
  4. Prepare a compliant written agreement disclosing the fund amount, the owner’s net after your fee, and the right to file directly at no cost (CA, FL, NC, IN, WA). No in-person or phone solicitation in TX.
  5. Secure any required license or registration before filing the claim. NC requires both PI license and Treasurer registration. FL Ch. 717 stage requires attorney/CPA/PI registration. UT contingent-fee finders need a PI license.
  6. In CO and WA: stop before soliciting. A compensation agreement for CO county-held surplus is void, and soliciting one is a misdemeanor/CPA violation. WA’s 5% cap is backed by criminal misdemeanor and CPA penalties.
  7. OR (post-9/26/2025): route through Treasury. The direct-to-Treasury model effectively forecloses the standard contingent-fee assignment model; verify the structural impact on your specific deal with Oregon counsel before proceeding.

For a former owner

  1. You can almost always claim directly. In CA, FL, GA, MN, OR, WI, and many more, the county, clerk, or court has a self-service claim form. The State unclaimed-property website lists any funds that have escheated.
  2. If you sign with an agent: Demand to see your state’s statutory cap. In states with a hard cap (WA 5%, IN 10%, AR 10%, NV 10%, NC 20%/$1,000), a fee above that ceiling is void — you owe nothing over the cap and the agent may face civil or criminal consequences.
  3. Check whether a cooling-off/void window applies. NC, HI, ME, MA, ND, UT: agreements signed within 24 months of delivery to the State administrator are void.
  4. Heirs and estates: Many states (CA, IN, TX) provide an affidavit or small- estate route for heirs to claim without probate. A recovery agent charging a full contingent fee on an heir’s simple-affidavit claim may be charging for services that require little specialized work.

surplus-funds, third-party-recovery-rules, surplus-waterfall, surplus-claim-assignment, tyler-v-hennepin-county, right-of-redemption, due-process-notice, treasurer-sale, sheriff-sale, escheat-and-unclaimed-property, quiet-title-after-tax-sale, indiana, texas, florida, north-carolina, nevada, washington, arkansas, colorado, oregon, california

Sources

Primary sources retrieved for this page (2026-06-10):

Legal information, not legal advice. This page summarizes statutes and cases that change frequently and vary by county practice. Verify every citation against the linked primary source and consult a licensed attorney in the relevant jurisdiction before acting. Last verified: 2026-06-10.

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