When homeowners don't pay their property taxes, the overdue amount becomes a lien on the property. A "lien" is a claim against your property to ensure you'll pay the debt. It effectively makes the property 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 property taxes in Indiana are delinquent, your home can be sold at a tax sale to pay off the tax bill. But the winning bidder from the sale normally can't get ownership of your home right away. You'll usually get some time to get caught up on the overdue amounts before that happens.
However, If you don't pay off the debt during what's called a "redemption period" after the sale, you'll lose the property permanently.
People who own real property have to 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.
If 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.
Indiana property taxes are due twice a year, in May and November.
A property is eligible to be sold at a tax sale when the prior year's spring installment of property taxes remains unpaid. (Ind. Code § 6-1.1-24-1).
To sell your home at a tax sale, the county auditor and treasurer must ask a court for a judgment. (Ind. Code § 6-1.1-24-2).
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 § 6-1.1-24-5).
At the tax sale, the winning bid generally must be at least the amount of the:
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.
The auditor must mail you a notice by certified mail and regular mail at least 21 days before the earliest date on which the application for judgment and order for sale of real property eligible for sale may be made. The auditor must also post a copy of the notice at the county courthouse, or in another public county building, and publish the notice in a newspaper for three weeks. (Ind. Code § 6-1.1-24-4, § 6-1.1-24-3).
But these requirements don't apply to property that's considered vacant or abandoned real property under Indiana law. (Ind. Code § 6-1.1-24-4, § 6-1.1-24-3).
Many states give delinquent taxpayers the chance to pay off the amounts owed and keep the home. This process is called "redeeming" the property.
In many 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 usually, 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.
Generally, people who lose their home to a tax sale in Indiana have two options to get the property back: Redeeming it or, in rare cases, setting aside (overturning) the 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:
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).
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).
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).
To redeem your home after a tax sale from a purchaser who bought your home at the sale, you'll likely have to pay:
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).
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.
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:
If you're already facing a property tax sale in Indiana and have questions (or need help redeeming your property), consider talking to a foreclosure lawyer, tax lawyer, or real estate lawyer.