When buying a property or land in Georgia, you may have heard the term “overage refund.” But what is it, and how does it affect you as a buyer or seller? In this article, we will explore the definition of overage refund, how it works, and what you need to know before entering into a transaction that involves overage refunds.
What is Overage Refund in Georgia?
An overage refund, also known as a surplus or excess proceeds, refers to the difference between the amount paid for a property or land at a tax sale and the total amount owed in taxes and fees. In Georgia, when a property owner fails to pay their property taxes, the county can initiate a tax sale to recoup the taxes owed. The sale proceeds are used to pay off the outstanding taxes and any other fees associated with the sale. If the sale price exceeds the total amount owed, the overage refund is the excess amount returned to the original property owner or other parties entitled to the funds.
How Does Overage Refund Work?
When a property is sold at a tax sale, the sale proceeds are used to pay off any outstanding taxes, penalties, and fees associated with the sale. If the sale price exceeds the total amount owed, the excess funds are placed into an overage account. The overage account holds the funds for a certain period, typically one year, during which time parties entitled to the funds can claim them.
Who is Entitled to Overage Refunds?
The original property owner or their heirs are entitled to the overage refund. In some cases, other parties may also be entitled to the funds. For example, if the property was sold to a third party, the overage refund would go to the third party. If the property was subject to a mortgage, the overage refund would go to the mortgage holder. In some cases, if the property was subject to multiple liens, the overage refund would be distributed among the lienholders based on their priority.
What You Need to Know as a Buyer or Seller
As a buyer or seller in a property transaction that involves overage refunds, it is essential to understand how they work and the potential implications. If you are buying a property that was previously sold at a tax sale, you should inquire about any overage refunds and ensure that they have been properly disbursed. You may also want to consider purchasing title insurance to protect against any unforeseen claims to the overage funds.
As a seller, you should be aware that the county may hold onto the overage funds for up to one year before disbursing them. This delay may affect your cash flow and ability to reinvest the funds. It is important to factor this into your financial planning and be prepared to wait for the funds to be released.
In summary, an overage refund in Georgia refers to the excess funds generated from the sale of a property at a tax sale. The overage refund is returned to the original property owner or other parties entitled to the funds. As a buyer or seller in a transaction involving overage refunds, it is important to understand how they work and the potential implications. With the proper knowledge and preparation, you can navigate the process of overage refunds and ensure a successful transaction.