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

If you don't pay property taxes in Connecticut, the delinquent taxes become a lien on the property. The tax collector can sell your home at a public auction (a tax sale) or through a tax foreclosure process.

You'll get notice before either of these sales happen and the opportunity to get caught up on the delinquent amounts plus interest, fees, and costs. If you can't pay up, you'll eventually lose ownership of your home permanently.

How Do Property Taxes Generally Work?

People who own real property must pay property taxes. The government uses the money that 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.

If you don't pay property taxes in Connecticut, the tax collector can sell your home at a public auction (a tax sale) or through a tax foreclosure process.

How Connecticut Property Tax Sales Work

Under Connecticut law, the tax collector must send you (the taxpayer) notice before the sale. The collector will send you the following notices:

• a notice by certified mail, not more than 12 weeks and no less than nine weeks before the sale
• a second notice by certified mail, not more than eight weeks nor less than five weeks before the sale, and
• a third notice by certified mail, not more than four weeks nor less than two weeks before the sale. (Conn. Gen. Stat. § 12-157).

The collector must also post, file, and publish notice of the sale before it takes place. (Conn. Gen. Stat. § 12-157).

Tax Sale Process

At the tax sale, the collector sells the home to the highest bidder. If no one bids on the property at the auction or the bid isn't high enough to cover the amounts owed, the collector sells the property to the municipality.

Within two weeks after the sale, the collector executes a deed to the high bidder or the municipality. The unrecorded deed remains at the town clerk's office for six months, subject to your right of redemption (see below). (Conn. Gen. Stat. § 12-157).

How Connecticut Tax Foreclosures Work

If you don't pay your real property taxes in some parts of Connecticut, you might face a tax foreclosure instead of a tax sale.

The Tax Foreclosure Process

In Connecticut, the tax collector of the municipality may file a lawsuit in court to foreclose the tax lien. The court sets the time limit for redemption. Upon the expiration of the period for redemption, the court makes a final judgment of the foreclosure. (Conn. Gen. Stat. § 12-181, Conn. Gen. Stat. § 12-191).

How Summary Foreclosures Work

In some cases, the tax collector may initiate a summary proceeding to foreclose. A summary procedure can happen if the fair market value of your home is less than the total amount you owe, including tax liens and other encumbrances, and is not more than $100,000. (Conn. Gen. Stat. § 12-182).

How to Redeem the Property After a Tax Sale or Tax Foreclosure in Connecticut

Many states allow delinquent taxpayers to pay off the amounts owed and keep the home, even after a tax sale happens. This process is called "redeeming" the property.

In some states, the homeowner can redeem the home after a tax sale by paying the buyer from the tax sale the amount paid (or by paying the taxes owed), plus interest, within a limited amount of time. Exactly how long the redemption period lasts varies from state to state, but often, the homeowner gets at least a year from the sale to redeem the property. In other states, though, the redemption period happens before the sale.

In Connecticut, you can redeem the property after a tax sale or tax foreclosure.

Your Right of Redemption After a Tax Sale in Connecticut

In Connecticut, you can get your home back after a tax sale by redeeming it within a specific time frame.

General right to redeem. In most cases, you get six months after the sale to redeem the home. (Conn. Gen. Stat. § 12-157).

Reduced redemption period for abandoned properties. If you abandon the home (that is, permanently move out) or the home meets other conditions established by town ordinance, you get 60 days after the sale to redeem. (Conn. Gen. Stat. § 12-157).

How much you'll have to pay to redeem. You can get your home back by paying:

• the amount of taxes, interest, and charges due at the time of the sale, and
• interest at the rate of 18% per year on the total purchase price that the person (or entity) who bought the home at the auction paid. (Conn. Gen. Stat. § 12-157).

Your Right of Redemption In a Tax Foreclosure in Connecticut

You can also redeem after a tax foreclosure in Connecticut.

Redemption period after a tax foreclosure. If the tax collector chooses to foreclose the tax lien through the courts with a lawsuit, the court will set the redemption period. (Conn. Gen. Stat. § 12-181).

How much you'll have to pay to redeem. You can get your home back by paying the amount of the tax lien, plus interest, lien fees, and other accrued charges. (Conn. Gen. Stat. § 12-189).

Redemption Period After a Summary Foreclosure Proceeding

In some circumstances, the collector may file a petition for a summary foreclosure with the court. When a summary foreclosure occurs, you have until the last day of the fourth month after the month in which the collector filed the summary foreclosure petition to redeem. (Conn. Gen. Stat. § 12-183).

Does a Mortgage Survive a Tax Sale or Tax Foreclosure in Connecticut?

When you have a mortgage on your home, the loan servicer might collect money from you as part of the monthly mortgage payment to later pay the property taxes. The servicer pays the taxes on the homeowner's behalf through an escrow account. But if the taxes aren't collected and paid through this kind of account, the homeowner must pay them directly.

If your loan isn't escrowed and you don't pay the property taxes like you're supposed to, your loan servicer will probably pay the delinquent taxes and then bill you for them. But why is the servicer concerned about the taxes? Because of the property tax lien's priority.

Property Tax Lien Priority

Property tax liens almost always have priority over other liens, including mortgage liens and deed of trust liens. (For purposes of this discussion, the terms "mortgage" and "deed of trust" are used interchangeably.)

Because a property tax lien has priority, if your home is sold through a tax sale or tax foreclosure, the sale wipes out any mortgages. So, the loan servicer will usually advance money to pay delinquent property taxes to prevent this from happening. Most mortgages have a clause allowing the lender to then add the amount it paid to your loan balance. You'll then have to make repayment arrangements with the servicer.

You Might Face a Foreclosure If You Don't Pay

The terms of most mortgage contracts require the borrower to stay current on the property taxes. If you don't reimburse the servicer for the tax amount it paid, you'll be in default. The servicer might then foreclose on the home in the same manner as if you had fallen behind in monthly payments. The Connecticut foreclosure process, too, takes a while, and you'll get notified before a foreclosure sale happens.

Your Servicer Might Set Up an Escrow Account

After demanding repayment of the amount it paid for the taxes, penalties, plus interest (and assuming you repay this tax debt), your servicer will probably set up an escrow account for the loan. Each month, you'll have to pay approximately one-twelfth of the estimated annual cost of property taxes—and perhaps other expenses, like insurance—along with your usual monthly payment of principal and interest. This money goes into the escrow account.

The loan servicer then pays the cost of the taxes and other escrow items on your behalf through the escrow account.

What Gives the Servicer the Right to Set Up an Escrow Account?

Many mortgages have a clause that gives the lender the ability to establish an escrow account basically at any time it chooses. The servicer sets up and manages the account on behalf of the lender.

To find out if and when the lender can set up an escrow account for your loan, read your mortgage contract and any other relevant documentation you've signed, like an escrow waiver.

Pros and Cons of a Mortgage Escrow Account

The downside to having an escrow account is that you'll have to make a bigger payment to the servicer each month. On the positive side, having an escrow account saves you from having to come up with a large amount of money when tax bills, and perhaps other bills, are due.

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

Even though Connecticut gives you a redemption period after the tax sale or foreclosure, generally, it is better to take action before you even get behind in taxes to try to make them more affordable. For example, you could:

• try to reduce the amount you have to pay by challenging the assessed value of your home (if you think it is incorrect) or
• find out if you qualify for a property tax abatement.

Getting Help

If you're already facing a tax sale or tax foreclosure in Connecticut and have questions (or need help redeeming your property), consider talking to a foreclosure lawyer, tax lawyer, or real estate lawyer.