Getting Your Home Back After a Property Tax Sale in New York

Update: On December 28, 2020, New York Governor Andrew Cuomo signed the "COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020" (A11181/S09114) into law. An extension to this law prohibits local governments from conducting a tax foreclosure or tax lien sale in New York until August 31, 2021, if the homeowner files a COVID-19 hardship declaration with the applicable village, town, city, school district, county, or other entity or person that conducts tax foreclosures or tax lien sales.

If you're a homeowner in New York and you let your property taxes become delinquent, you could lose the place to a tax foreclosure. But you'll get the chance to save your home because, under New York law, you can "redeem" it. If you don't redeem the property, though, your home will be sold at an auction or the tax district will get ownership of the property through the foreclosure process.

What Is a Property Tax Lien?

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

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. (Learn about your options to avoid a tax sale if you can't keep up with the property taxes.)

How Tax Foreclosures Work in New York

If you're delinquent on your property taxes in New York, the officer with authority to collect taxes can initiate a foreclosure by filing a petition (a lawsuit) with the court. If you don't file an answer, the court will enter a default judgment against the property. (A default judgment means you automatically lose because you didn't respond to the lawsuit.)

Then, either the tax district gets possession of the property directly, or an auction is held to sell it. (N.Y. Real Prop. Tax Law § 1120, § 1166).

Your Right to Redeem the Home in a New York Tax Foreclosure

In New York, you can prevent the loss of your home to a tax foreclosure by "redeeming" it. To redeem the property, you'll have to pay the amount of the delinquent tax lien or liens, including all charges authorized by law before the redemption period expires. (N.Y. Real Prop. Tax Law § 1110).

When Does the Redemption Period Expire in New York?

Generally, the redemption period expires two years after the lien date. (N.Y. Real Prop. Tax Law § 1102, § 1110).

But the redemption period might be longer than two years after the lien date if:

• the tax district provides a longer period to redeem (like three or four years) (N.Y. Real Prop. Tax Law § 1111), or
• the published notice of foreclosure specifies a later date for the redemption period to expire. (N.Y. Real Prop. Tax Law § 1110).

On the flip side, the tax district may reduce the redemption period to one year for residential vacant and abandoned property if the property has been placed on a vacant and abandoned roll, registry, or list prior to the date on which taxes become delinquent in the local municipality. (N.Y. Real Prop. Tax Law § 1110).

Additional Time to Redeem Your Property in New York

New York law also permits the owner to redeem until:

• the 30th day after the notice of foreclosure is mailed, or
• the date specified by the notice of foreclosure as the last day for redemption, whichever is later. (N.Y. Real Prop. Tax Law § 1125).

You Might Be Able to Pay off Your Delinquent Taxes in Installments

If your tax district allows it, you might be able to pay off your delinquent taxes over time by entering into an installment agreement. The term of the agreement can't be longer than 36 months. You'll have to make a down payment, though no more than 25% of the eligible delinquent taxes. (N.Y. Real Prop. Tax Law § 1184).

You're not eligible to enter into an installment agreement, though, if:

• there is another delinquent tax lien on your property (or on another property you own) and that lien isn't eligible to be part of the agreement
• you lost another property to a tax foreclosure within the past three years, or
• you defaulted on a tax installment agreement in the past three years. (N.Y. Real Prop. Tax Law § 1184).

Ways You Might Be Able to Get Your Home Back After a Tax Foreclosure

If you lose your home to a tax foreclosure, depending on the circumstances, you might be able to get it back by taking one of the following legal actions.

Filing a Motion to Reopen the Default Judgment

If you don't redeem or file an answer to the lawsuit, you might be able to reopen the default judgment in rare circumstances. To do this, you must file a motion stating the reasons why the judgment should be reopened, like showing a very good reason why you failed to respond to the suit, no later than one month after the court enters its judgment. (N.Y. Real Prop. Tax Law § 1131).

Asking the Court to Set Aside the Tax Deed

You might, in some limited situations, be able to invalidate a tax foreclosure and the resulting tax deed that gave title to a new owner. For example, if you weren't given proper notice of the foreclosure, you could ask the court to set aside (invalidate) the deed. You must start the proceeding to object to the deed within two years after the tax deed is recorded. (N.Y. Real Prop. Tax Law § 1137).

Getting Help from a Local New York Lawyer

New York's tax foreclosure laws covering redemption, as well as reopening or setting aside a sale, are complicated. To find out the deadline for redeeming your property in a New York tax foreclosure or if you want to reopen a default judgment or set aside a tax deed, you should consult with an attorney, such as a foreclosure lawyer, a real estate lawyer, or a tax lawyer who has experience in property tax matters.