Getting Your Home Back After a Property Tax Sale in Indiana

Unless you've abandoned the property, you can redeem your Indiana home after losing it to a tax sale.

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 Indiana, to sell your home at a tax sale, the county auditor and treasurer must ask a court for a judgment. The court will order a sale, and the treasurer will sell your home at a public auction to the highest bidder, subject to your right of redemption (see below). (Ind. Code § 6-1.1-24-2, § 6-1.1-24-5). The high bidder, or the county or town if no one makes a minimum bid, then gets a certificate of sale. (Ind. Code § 6-1.1-24-9). This certificate doesn't convey ownership of the property to the purchaser. Ownership is conveyed through a tax deed after the redemption period expires.

Generally, people who lose their home to a tax sale in Indiana have two options to get the property back: Redeeming it or setting aside (overturning) the sale. In most cases, you'll then get the opportunity to pay off the overdue amounts, plus interest, and "redeem" the property within a specified period of time. But if you abandon the property or don't pay up, you'll lose your chance to keep your Indiana home unless you're able to invalidate the completed tax sale, which rarely happens.

Right to Redeem After a Tax Sale, Generally

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.

How Long Is the Redemption Period After an Indiana Tax Sale?

Generally, in Indiana, the homeowner gets one year to pay the redemption amount and reclaim the property following a tax sale. (Ind. Code § 6-1.1-25-4).

In some cases, though, the redemption period is 120 days, including when:

  • the county acquires a lien for which the certificate of sale isn't sold (120 days after lien acquisition) or is sold (120 days after the sale of the certificate)
  • the county assigns the certificate to a political subdivision, or
  • if an eligible urban homesteading program gets the certificate. (Ind. Code § 6-1.1-24-9, 6-1.1-25-4).

Getting an Extended Redemption Period

If the property doesn't sell at a tax sale, and the treasurer and owner agree before the expiration of the 120-day redemption period for payment of the entire amount within one year of the agreement, then the treasurer may extend the redemption period to one year after the agreement date.

But if the homeowner doesn't comply with the agreement, the treasurer may terminate the agreement after giving 30 days written notice to the owner, and the extended redemption period then expires 30 days after the notice date. (Ind. Code § 6-1.1-25-4).

No Right to Redeem for Abandoned Homes

You can't redeem the property if the home is considered vacant and abandoned under Indiana law and is included on the list of such properties that the county auditor prepares. (Ind. Code § 6-1.1-25-4).

Notice About the Right to Redeem

No later than 90 days after the sale, the person who bought your home at the sale must send you a notice about your right to redeem the property. (Ind. Code § 6-1.1-25-4.5).

How Much You'll Have to Pay to Redeem Your Indiana Home

To redeem your home after a tax sale from a purchaser who bought your home at the sale, you'll likely have to pay:

  • 110% of the minimum bid required at the auction, which includes taxes, penalties, and costs, if you're redeeming the property within six months after the sale date
  • 115% of the minimum bid amount if redeeming the property more than six months, but not more than one year, after the sale date
  • 5% per year on the amount of the purchase price that exceeds the minimum bid amount
  • all taxes and special assessments the purchaser paid
  • 5% per year on any taxes or special assessments that the purchaser paid
  • all additional taxes, special assessments, interest, penalties, and fees on the property that accrued and are delinquent after the sale
  • all taxes or special assessments, or both, paid by the county treasurer, and
  • costs. (Ind. Code § 6-1.1-25-2).

What Usually Happens If You Don't Redeem

If the real property isn't redeemed during the redemption period, the purchaser can apply to the court to get a tax deed (title) to your home. (Ind. Code § 6-1.1-24-9).

Setting Aside a Completed Tax Sale

In some rare situations—like if the tax lien or tax sale process has defects, the taxes were paid or not owed, or excusable neglect—you might be able to invalidate a completed tax sale. The reasons that justify, as well as the procedures for, invalidating a tax sale are complicated. If you lose your home to a tax sale and want to learn more about setting the sale aside, talk with a qualified lawyer as soon as possible.

Ways to Lower Your Property Taxes

Even though you'll probably get a redemption period after an Indiana tax 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:

  • find out if you meet the criteria for a property tax abatement, or
  • request a change in the property's assessment if you feel your assessed property value isn't reflective of the fair market value.

How to Get More Information

If you want more information about property tax and redemption laws in Indiana, 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.

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