What Happens If I Don't Pay Property Taxes in Iowa?

People who own real property must pay property taxes. The government uses the money these taxes generate to pay for schools, public services, libraries, roads, parks, and the like. Typically, the tax amount is based on a property's assessed value.

When homeowners don't pay their property taxes, the overdue amount becomes a lien on the property. A lien effectively makes the property act as collateral for the debt. All states have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes.

So, if your Iowa property taxes are delinquent, the county treasurer can sell your property (or a percentage of it) at a tax sale. However, you'll have some time to pay off the debt and get the property back after the sale.

How Does Iowa Handle Property Tax Non-Payment?

In Iowa, property taxes are due two times per year, on March 1 and September 1. (Iowa Code § 445.36.) You get a one-month grace period before 1.5% interest per month kicks in. (Iowa Code § 445.39.)

What Are the Consequences of Not Being Able to Pay Property Taxes in Iowa?

If the taxes remain unpaid after April 1 or after October 1, they're considered delinquent. (Iowa Code § 445.37.) A property can be sold at a tax sale when taxes are delinquent.

How Do Iowa Property Tax Sales Work?

Tax sales in Iowa are public auctions. But instead of selling the home to the highest bidder, the winning bidder is the person or entity willing to pay the total amount due in exchange for the smallest percentage interest in the property. (Iowa Code § 446.15, § 446.16.)

Can Someone Take Your Property By Paying the Taxes in Iowa?

The sale usually takes place on the third Monday in June unless the treasurer designates a different date. Again, the property is offered for sale to the bidder willing to take the smallest percentage of the property, though not less than 1%, for the total amount of taxes, interest, costs, and fees due. (Iowa Code § 446.16.)

After the sale, the winning bidder gets a certificate of purchase. (Iowa Code § 446.29.)

Notice Before a Property Tax Sale in Iowa

Before the sale, the county treasurer must provide notice by mail and publication.

Notice by mail. The treasurer must mail you a notice not later than May 1 unless May 1 is a Saturday or Sunday, in which case the notice may be mailed on the first business day in May. (Iowa Code § 446.9.)

Notice by publication. Before the sale, the treasurer must also publish one notice in a newspaper at least a week, but not more than three weeks. (Iowa Code § 446.9.)

Notice After a Property Tax Sale in Iowa

Within 15 days after the sale, the county treasurer must send you a notice that the property was sold at a tax sale. (Iowa Code § 446.2.)

Can I Get My Home Back After an Iowa Tax Sale?

In most cases, you'll get one year and nine months, called a "redemption period," after the sale to redeem the property. (Iowa Code § 447.9.) ("Redeeming" the property means reclaiming a home you would otherwise lose through the tax sale process.) Sometimes, the redemption period is shorter, like if the home didn't sell at a previous tax sale or in the case of certain abandoned properties. Talk to a lawyer to determine your specific situation's redemption period.

Also, a person with a legal disability may redeem through a court action within one year after the disability is removed or through legal representation at any time before the deed is delivered. (Iowa Code § 447.7.)

Additional 90-Day Redemption Period

After the redemption period expires, you get another 90 days to redeem the home. This extra time happens because, once the redemption period ends, the person (or entity) that holds the certificate of purchase must mail you a notice about your right to redeem expiring. This notice gives you an additional 90 days to redeem. (Iowa Code § 447.9, § 447.12.)

If you don't redeem by the end of the 90 days, your right to do so expires. The certificate holder will then get a deed to your property and become the new owner. (Iowa Code § 448.1.)

How Much You'll Have to Pay to Redeem

To redeem your property after an Iowa tax sale, you must pay the county treasurer:

• the price that the purchaser paid at the tax sale, including a fee for the certificate of purchase
• 2% interest per month, and
• the total amount of any taxes the purchaser paid for any subsequent years, plus interest. (Iowa Code § 447.1.)

Getting Your Home Back After a New Owner Gets Ownership

After the new owner receives the deed, you might be able to get your Iowa home back by filing a court action. You must have a basis for the action like you didn't get proper notice about your right to redeem expiring. (Iowa Code §§ 447.8.)

If you want to file a lawsuit to get your home back after the new owner receives a deed to the property, you'll most likely need a lawyer to help you.

What Happens to My Mortgage in a Tax Sale?

Because a property tax lien has priority, mortgages (and deeds of trust) get wiped out if you lose your home through a tax sale process. So, If your loan isn't escrowed and you fail to pay the property taxes like you're supposed to, the loan servicer will usually advance money to pay delinquent property taxes to prevent a tax sale from happening.

Most mortgages have a clause allowing the lender to add the amount it paid to bring the taxes current to your loan balance. You'll then have to make repayment arrangements with the servicer or potentially face a foreclosure.

What Options Do I Have If I Can't Afford to Pay My Property Taxes in Iowa?

While Iowa law provides a redemption period after a tax sale, it's better to take steps to make your taxes affordable before you get behind. For instance, you could file an appeal to challenge your home's assessed value if you think it's incorrect. Generally, the assessor assigns a property's value after considering variables like the home's value compared to similar properties that were recently sold and local market conditions.

Getting Help

Talk to a foreclosure lawyer, tax lawyer, or real estate lawyer if you're facing a tax sale in Iowa and have questions about the process or need help redeeming your property.