PORTLAND, Ore. — Multnomah County has agreed to pay millions of dollars to settle a class action lawsuit that accused it of unlawfully keeping surplus proceeds from the sales of foreclosed homes. The agreement could provide compensation to former property owners, heirs, and lienholders who were entitled to those funds.
Background of the Lawsuit
The lawsuit was filed in 2023, following a landmark ruling from the U.S. Supreme Court that counties cannot retain the entire amount from the sale of foreclosed properties. Instead, any funds left after covering unpaid taxes, fees, and foreclosure costs — known as surplus funds — must be returned to the rightful parties.
Three Oregon homeowners initiated the case, arguing that counties had violated property rights by withholding those surpluses. Among them was Martin Lynch, who sued on behalf of his late wife. Lane County foreclosed on her Springfield property after she fell behind on nearly $32,000 in taxes. The home later sold for about $118,500, leaving almost $87,000 in surplus proceeds that the county kept.
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Settlement Details
Under the settlement, Multnomah County will contribute $3.5 million — representing all surplus proceeds collected since 2017, plus interest — into a fund to pay affected homeowners, heirs, or lienholders.
County officials emphasized that they were acting within the framework of Oregon law at the time.
“Multnomah County was following existing state law when it retained the surplus funds,” county spokesperson Julie Sullivan-Springhetti said. She added that the county budgeted for the settlement in its 2025 budget after agreeing to terms on July 25.
The settlement applies only to Multnomah County. Legal action against other counties named in the lawsuit, including Lane and Yamhill counties, is still ongoing.
Who Could Benefit
Those eligible to receive funds include:
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Former homeowners whose properties were foreclosed on and sold for more than the taxes and fees owed.
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Heirs of deceased former owners.
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Valid lienholders with claims on foreclosed properties.
The exact amount each individual will receive depends on the surplus generated from their property and the number of valid claims submitted.
Once the settlement receives court approval, notices will be sent to all potentially entitled parties, informing them of how to file claims.
Broader Implications
The lawsuit and settlement highlight how foreclosure practices have shifted nationwide in light of the Supreme Court’s decision. For decades, counties in Oregon and other states followed laws that allowed governments to retain all proceeds from tax-foreclosure sales.
The ruling — and now Multnomah County’s agreement — sets a precedent that could impact foreclosure procedures statewide. Other counties may face similar financial exposure as cases proceed through the courts.
A Step Toward Resolution
While Multnomah County maintains it acted in compliance with state law at the time, the settlement reflects an effort to bring closure and ensure compliance with new legal standards.
For former property owners and families who lost homes to foreclosure, the agreement offers the possibility of long-delayed restitution.
“This settlement is about correcting past practices and making sure that those entitled to surplus funds receive them,” Sullivan-Springhetti said.
