How the Coronavirus Outbreak Is Affecting Property Taxes, Tax Sales, and Tax Foreclosures

Many counties are extending property tax payment due dates, as well as postponing tax sales and tax foreclosures due to the COVID-19 national emergency.

By , Attorney

Across the U.S., many counties have extended the deadline for homeowners to pay their property taxes due to the COVID-19 national emergency. Various places are postponing tax sales and tax foreclosures, as well. Moratoriums on mortgage foreclosures are also widespread throughout the country because of the coronavirus crisis.

In this article, you'll get general information about property taxes, how property tax sales work, and how the coronavirus outbreak might delay the due date for your property taxes or postpone an upcoming tax sale of your home.

How Property Taxes and Tax Liens Work

Owners of real property have to pay property taxes. These taxes fund various services that the government provides, like schools, libraries, roads, parks, and the like. The amount of tax due is usually based on the home's assessed value.

Typically, if a property is mortgaged, the servicer, on behalf of the loan owner, will collect extra money each month, along with the principal and interest due on the loan, and put that money in what's called an escrow account. Then, when the property taxes come due, the servicer pays those taxes on the homeowner's behalf.

But if the taxes aren't collected and paid through escrow, the homeowner must pay them on his or her own. If the homeowner (or mortgage company) doesn't pay the property taxes, the delinquent amount becomes a lien on the home.

What Is a Property Lien?

A property lien is kind of like a parking boot—but for your home. Here's how they're similar: If you don't pay the parking tickets that you receive, parking enforcement clamps a boot on your vehicle. Then you can't move your car. You can think of a lien as a parking boot on your real estate. Once a property lien attaches to your home, you probably won't be able to transfer your property or borrow against it. If you manage to sell the home, the lien stays on the property's title as an encumbrance (much like how a parking boot encumbers your car).

What Happens After a Lien Attaches to Your Home?

After a property tax lien attaches to the home, the taxing authority might eventually hold a tax sale and sell the property. Generally, the two basic types of tax sales are tax deed sales and tax lien certificate sales. With a tax deed sale, the taxing authority sells the title to the home. In a tax lien certificate sale, the taxing authority sells the lien that's on the home. If the delinquent taxes aren't paid by a certain date, the purchaser of the lien generally has a right to foreclose the lien, or take specific steps to convert the certificate to a deed, and get title to the home.

In some jurisdictions, though, a sale isn't held. Instead, the taxing authority simply executes its lien by taking title to the home. State law then generally provides a procedure for the taxing authority to dispose of the home, typically by selling it. In other jurisdictions, the taxing authority uses a foreclosure process before holding a sale.

Payment Due Date Extensions and Tax Sale Postponements Due to COVID-19

Many counties across the U.S. have extended the deadline for homeowners to pay their property taxes because of the COVID-19 outbreak. Generally, if a county extends the property tax due date, the homeowner won't be subject to penalty or interest. (Mortgage companies and other intermediaries that pay property taxes on behalf of their customers, though, usually still have to pay by the original due date to avoid penalties and interest.)

Redemption Deadline Also Might Be Extended

Most jurisdictions that sell tax deeds offer a right of redemption, which allows the homeowner to get the home back after a tax sale. To redeem, you must reimburse the purchaser the amount paid at the sale, or pay the taxes owed, plus interest within a specific time frame called a "redemption period," which is generally between one to three years. Sometimes, however, the redemption period takes place before the sale. If you pay the delinquent taxes, the sale won't take place.

Many places are delaying redemption deadlines for homeowners who've lost their property to a tax sale.

How to Find Out if Your Property Tax Due Date or Tax Sale Is Postponed

Call your local taxing authority, like the county treasurer's office or tax collector's office, or look online, to find out if your area has a delayed property tax due date or a tax sale moratorium in place. You might also consider checking Twitter, as many governors and state officials are using this forum to announce emergency measures before posting them on official websites.

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