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Sedgwick County moves $1.28 million to cover tax-foreclosure sale after vendor failed to remit proceeds
Summary
County commissioners authorized a $1,281,357.08 transfer from contingency to a treasurer clearing account so deeds and distributions from an Oct. 21 tax foreclosure sale can proceed after vendor CivicSource did not deliver sale proceeds; county will seek recovery from the vendor or litigation.
Lindsey Pro Russo, Sedgwick County chief financial officer, told commissioners that 81 properties sold at a tax foreclosure sale on Oct. 21 and that a vendor that administered the sale has not remitted funds to the county. To avoid delaying deeds and distributions to lienholders, the Board unanimously approved a temporary transfer of $1,281,357.08 from the county contingency to the treasurer's administration fund center.
Why it matters: The transfer ensures people who participated in the tax sale are made whole and that courts can distribute proceeds to lienholders and entities with legal claims. Pro Russo said the county hopes to recover the funds from CivicSource, the auction administrator, or through litigation if necessary.
What the county reported: Pro Russo summarized the financials: 81 properties produced gross sale receipts and related collections; after presale costs (about $328,000) and deed registration fees (about $1,700), the recommended transfer amount is $1,281,357.08. She said CivicSource received the funds but “has still not provided those funds to the county,” despite assurances from the vendor’s CFO, and the county must act now so district court distribution is not delayed.
Legal and procedural context: County legal staff and outside counsel explained how Kansas law directs distribution of foreclosure sale receipts. Outside counsel Chris McElgin said proceeds are applied first to sale costs and then to priority tax liens; any excess proceeds are applied to other lienholders (IRS, state revenue, mortgage holders, mechanic’s liens) and that residual funds held by the court require claimants to assert entitlement. If no claimant comes forward, the district court can eventually release unclaimed funds to the Kansas treasurer’s unclaimed property process.
Commission reaction: Commissioners voiced frustration that the county must temporarily cover funds because a private vendor failed to remit money. Commissioner Howe noted that some excess proceeds could flow back to property owners after creditors are paid; legal counsel confirmed the formula and court oversight. Chairman Beatty framed the action as a protective step for individuals who acted in good faith at the sale.
Vote and next steps: The motion to authorize the transfer and payment to a treasurer clearing account passed unanimously. County staff said the treasurer will present the funds to the 18th Judicial District Court for distribution and that the county will continue efforts to recover the money from CivicSource or via litigation. The Commission directed staff and communications to keep the public informed.
Ending: The board approved the transfer as an interim step to protect participants in the sale; any recovery from CivicSource or by court process will be reported back to the Commission.
