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Ellsworth council declines to return $117,907 in excess foreclosure proceeds after legal advice
Summary
A motion to return $117,907.99 from the auction of 1516 Fifth St. to the prior owners (Karst family) failed for lack of a second after the city’s tax collector and legal advisors said there is no statutory mechanism to refund the funds.
A motion to return $117,907.99 in excess proceeds from the auction sale of 1516 Fifth Street to the property’s prior owners failed to advance at the Ellsworth City Council meeting on Aug. 18, 2025.
Councilor (Speaker 8) moved to return the money plus 6% interest, calling the sum “someone’s hard-earned money.” Tax collector Sue McLean told the council her legal advice is that the city lacks authority to refund auction proceeds and that doing so could set a difficult precedent. “We legally can't send it back,” McLean said, adding city lawyers advised against such an action.
City Manager Charlie and other councilors noted the same legal constraint, saying earlier council actions and state statute limit the city’s options. Charlie said staff and legal counsel had reviewed the matter and concluded there was no statutory mechanism to move funds back to a prior owner. The motion was made but failed for lack of a second.
Council members discussed alternatives, including reviewing how the real-estate-sale fund is used after it is recorded in the general fund and exploring whether leftover balances could be directed to housing or fuel-assistance programs. Finance staff described the mechanics of the real-estate sales fund and noted that assigned purposes can be made by future council action.
No formal refund was approved. The council did not vote to pursue further legal avenues at the meeting.
