What Happens If I Don't Pay Property Taxes in Alaska?

If you don't pay your property taxes in Alaska, you could eventually lose your home through a property tax foreclosure. But under Alaska law, you get time to reclaim the property after a tax foreclosure by redeeming it or, in some cases, by repurchasing it.

How Do Property Taxes Work Generally?

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.

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.

All states, including Alaska, have laws that allow the local government to sell a home through a tax sale process (or get title to the property in another way) to collect delinquent taxes.

Can I Face Legal Action for Not Paying My Property Taxes in Alaska?

Again, in Alaska, delinquent property taxes can lead to a tax foreclosure

How Property Tax Foreclosures in Alaska Work

Once the past-due amount, includes the accrued taxes, interest, penalties, and costs, becomes a lien, the municipality can start a foreclosure by filing a petition (a lawsuit) with the court. The court then enters a judgment and foreclosure decree. (Alaska Stat. §§ 29.45.320, 29.45.330, 29.45.380.)

A public sale doesn't happen—foreclosed properties are transferred directly to the municipality. (Alaska Stat. §29.45.390). Your home's title (ownership) then goes to the municipality or applicable borough after the redemption period (see below) expires. (Alaska Stat. § 29.45.450.)

Notice of a Tax Foreclosure in Alaska

After the municipality files the foreclosure petition with the court, it must:

• publish a list of delinquent tax accounts in the newspaper for four weeks, or
• if the area doesn't have a newspaper, post the list publicly for at least 30 days. (Alaska Stat. § 29.45.330.)

Within ten days after the first publication or posting, the municipality must mail you a notice letting you know that it filed a foreclosure petition. (Alaska Stat. § 29.45.330.)

Stop an Alaska Tax Foreclosure By Paying the Delinquent Amounts

You can stop the foreclosure by paying the delinquent amount, including taxes, penalties, interest, and costs, up until the time the court transfers the home to the municipality. (Alaska Stat. § 29.45.340.)

Can I Get My Home Back After a Tax Foreclosure in Alaska?

Alaska law provides you with at least one year to get your home back after a tax foreclosure. That's because properties transferred to the municipality are held by the municipality for at least one year. This period is called a "redemption period." (Alaska Stat. § 29.45.400.)

To redeem (reclaim) the home, you must pay the municipality:

• the overdue taxes
• penalties
• interest, and
• costs. (Alaska Stat. § 29.45.400.)

You'll also have to pay any newly accrued taxes or assessments, as well as other liens or claims on the home. (Alaska Stat. § 29.45.400.)

Notice Before the Redemption Period Expires

At least 30 days before the redemption period expires, the clerk of court must:

• publish a redemption period expiration notice in the newspaper for four weeks, or
• if the area doesn't have a newspaper, post the notice publicly for four weeks. (Alaska Stat. § 29.45.440.)

Within five days after the first publication, the clerk of court must mail you a copy of the redemption period expiration notice by certified mail. (Alaska Stat. § 29.45.440.)

The right of redemption expires 30 days after the date of the first notice publication. (Alaska Stat. § 29.45.440.)

Can I Stay in My Alaska Home During the Redemption Period

You may live in the home during the redemption period. But if you cause damage to the home, the municipality may declare an immediate forfeiture of your right to possession and you'll have to give it up. (Alaska Stat. § 29.45.430.)

Can I Buy My Alaska Home Back After the Redemption Period?

Alaska law also gives you ten years to repurchase your home after a property tax foreclosure so long as the property has not yet been sold to a new owner. (Alaska Stat. § 29.45.470.)

How Much You Must Pay to Repurchase Your Alaska Home

To repurchase the home you'll have to pay:

• the full amount of the foreclosure judgment
• interest at a rate of no more than 15% a year from the foreclosure judgment date to the date you repurchase the property
• delinquent taxes assessed and levied as though the property had continued in private ownership
• the costs of the foreclosure action, and
• the costs that the municipality incurred to maintain and manage the property (including insurance, repairs, association dues, and management fees) if those amounts are greater than the amounts the municipality received for the use of the property. (Alaska Stat. § 29.45.470.)

Deadline to Repurchase Your Home If the Municipality Wants It for a Public Purpose

If the municipality decides to keep the property for a public purpose, you can repurchase it up until the municipality adopts an ordinance dedicating tax-foreclosed property for this purpose. (Alaska Stat. § 29.45.470.)

What Happens to My Mortgage in a Tax Foreclosure?

Because a property tax lien has priority, mortgages (and deeds of trust) get wiped out if you lose your home through a tax foreclosure process. So, If your loan isn't escrowed and you fail to pay the property taxes like you're supposed to, the loan servicer will usually advance money to pay delinquent property taxes to prevent a tax sale from happening.

Most mortgages have a clause allowing the lender to add the amount it paid to bring the taxes current to your loan balance. You'll then have to make repayment arrangements with the servicer or potentially face a foreclosure by your lender.

What Options Do I Have If I Can't Afford to Pay My Property Taxes in Alaska?

Even though you can get your home back after a tax foreclosure in Alaska, in most cases, it is better to take action before you fall behind in payments to try to make your taxes more affordable. For example, you could:

• try to reduce the amount you owe by appealing the tax assessor's value of your home, or
• see if you qualify for a property tax abatement.

Getting Help

Talk to a foreclosure lawyer, tax lawyer, or real estate lawyer if you're facing a tax foreclosure in Alaska and have questions about the process or need help redeeming your property.

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.