If you fail to pay your property taxes, the past-due amount becomes a lien on your home. This type of lien almost always has priority over other liens, including mortgages. Generally, when taxes remain unpaid, the taxing authority will eventually sell the lien (and if you don't pay the past-due amount to the lien purchaser, that party can foreclose or use some other method to get title to the home), or sell the property itself in a tax sale. Though, in some places, a sale isn't held; instead, the taxing authority executes its lien by taking title to the home. State law then generally provides a procedure for the taxing authority to dispose of the property, usually by selling it. In other jurisdictions, the taxing authority uses a foreclosure process before holding a sale.
In Colorado, after you fall behind in property taxes, the county treasurer (or its agent) can hold a tax lien auction, often on the Internet. The tax lien on your home is then sold to the highest bidder. The winning bidder gets a certificate of purchase and the right to collect the delinquent amounts from you. You get the opportunity to pay off the overdue amounts, plus interest, and "redeem" the home within a specified amount of time. But eventually, the purchaser of the lien can obtain title to the property if you don't pay off the past-due amounts, plus interest and costs.
In most states, delinquent taxpayers get some time during which they can "redeem" the home after a tax sale by paying the buyer the amount paid at the sale or paying the taxes owed, plus interest, penalties, and costs. In some states, the redemption period occurs before the sale. But if you don't redeem, the purchaser can get title to the home free and clear of any liens that existed before the sale.
Usually, the homeowner gets the right to live in the home during the redemption period. Exactly how long the redemption period lasts varies from state to state; one year to three years is typical. In some states, though, the time frame is much shorter.
In Colorado, you get a three-year redemption period following the sale during which you can redeem the property. (Colo. Rev. Stat. § 39-11-120). If you haven't redeemed after three years, the holder of the certificate of purchase can apply to the treasurer for title to your home and get a deed to the home.
You can redeem at any time before the treasurer signs the treasurer's deed giving title to the purchaser. (Colo. Rev. Stat. § 39-12-103).
To redeem your Colorado property following the tax lien sale, you must pay:
But you don't have to pay any excess amount that the winning bidder paid to buy the lien. (Colo. Rev. Stat. § 39-11-115). In some states, but not Colorado, you must reimburse the purchaser for the full amount paid for the lien.
After three years go by, the person or entity that bought the lien at the sale can get title to your home by requesting a deed from the treasurer. (Colo. Rev. Stat. § 39-11-120).
The treasurer serves you a notice by personal service or by either registered or certified mail not more than five months nor less than three months before the deed is issued. The notice will include, among other things, when the time for redemption expires or when the tax deed will be issued. (Colo. Rev. Stat. § 39-11-128).
Even though you'll get a redemption period after a Colorado tax lien sale, in most cases, it's better to take action before you become delinquent on your taxes to make them more affordable. You could, for example:
If you want more information about property tax and redemption laws in Colorado, consider talking to a foreclosure lawyer, tax lawyer, or real estate lawyer who has experience with property tax issues. To learn more about property taxes and other aspects of homeownership in general, get Nolo's Essential Guide to Buying Your First Home by Ilona Bray, J.D., Attorney Ann O'Connell, and Marcia Stewart.