People who own real property must pay property taxes. The government uses the money 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.
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 have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes.
So, if you don't pay your real property taxes in Idaho, the county will eventually get title to your home through a tax deed process and then sell the property to a new owner. Fortunately, you'll have some time to get current on the delinquent amounts and prevent a tax sale.
When you fail to pay your property taxes in Idaho, the county gets a lien on your home for the delinquent amount. (Idaho Code Ann. § 63-1003.)
Once the property taxes are three years delinquent, the county will take title to the home through a "tax deed" process. You'll get notice of the delinquency and the opportunity to pay the taxes to stop the process (called "redeeming" the property"). (Idaho Code Ann. § 63-1005.)
You also get the right to a hearing to dispute the delinquency. The county takes title to your home if you don't get caught up or prevail at the hearing. (Idaho Code Ann. § 63-1006.)
Then, the county will hold a public auction no later than 14 months after the tax deed issues. The county will sell the home to the highest bidder at the auction. (Idaho Code Ann. § 31-808.)
But the bid generally must meet a minimum threshold: the amount of overdue taxes, interest, and costs. The board of county commissioners has the right to accept or reject a bid for a lesser amount. (Idaho Code Ann. § 31-808.)
If the home doesn't sell at the auction, the county can sell it at a subsequent auction or a private sale. (Idaho Code Ann. § 31-808.)
Before the county gets a tax deed, the county tax collector will send you a notice by certified mail, return receipt requested, no more than five months and no less than two months before the date that the tax deed will issue. (Idaho Code Ann. § 63-1005.)
If the notice is returned undelivered, the tax collector must publish a summary of the notice in a newspaper at least once a week for four consecutive weeks, with the last publication being no more than two months and no less than 14 days before the tax deed issues. (Idaho Code Ann. § 63-1005.)
Before your home is sold to a new owner at an auction, the county must publish notice in a newspaper at least ten calendar days before the sale. (Idaho Code Ann. § 31-808.)
You can generally redeem (pay the delinquent amounts and save your home) up to:
To redeem the property, you'll have to pay the tax delinquency, late charges, accrued interest, and costs, including, but not limited to, title search and other professional fees. (Idaho Code Ann. § 63-1007.)
If you have a mortgage on your home, the loan servicer might collect money from you as part of the monthly payment to later pay the property taxes. The servicer then pays the taxes on your behalf through an escrow account.
But if the property taxes aren't collected and paid through this kind of account, you must pay them directly.
If your loan isn't escrowed and you don't pay the property taxes, the loan servicer might pay any delinquent taxes and then bill you for them. Here's why: Property tax liens almost always have priority over other liens, including mortgage liens and deed of trust liens. (For purposes of this discussion, the terms "mortgage" and "deed of trust" are used interchangeably.)
Because a property tax lien has priority, if you lose your home through a tax deed process, any mortgages get wiped out. So, the loan servicer will usually advance money to pay delinquent property taxes to prevent this from happening. The servicer will then demand reimbursement from you (the borrower).
The terms of most mortgage contracts require the borrower to stay current on the property taxes. If you don't reimburse the servicer for the tax amount that it paid, you'll be in default under the mortgage's terms.
The servicer can then foreclose on the home in the same manner as if you had fallen behind in monthly payments.
After demanding repayment of the amount it paid for the taxes, penalties, plus interest (and assuming you repay this debt), your servicer will probably set up an escrow account for the loan.
Each month, you'll have to pay approximately one-twelfth of the estimated annual cost of property taxes—and possibly other expenses, like insurance—along with your regular monthly payment of principal and interest. This money goes into the escrow account.
The loan servicer then pays the cost of the taxes and other escrow items on your behalf through the escrow account.
Many mortgages have a clause that allows the lender to establish an escrow account basically at any time it chooses. The servicer establishes and manages the account on the lender's behalf.
To find out if and when the lender can set up an escrow account for your loan, read your mortgage contract and any other relevant documentation you've signed, like an escrow waiver.
The downside to having an escrow account is that you'll have to make a bigger monthly payment to the servicer. On the positive side, having an escrow account saves you from having to come up with a large amount of money when tax bills, and perhaps others, are due.
If you're having trouble paying your property taxes, you might be able to reduce your tax bill or get extra time to pay.
Talk to a foreclosure lawyer, tax lawyer, or real estate lawyer if you're facing a tax sale in Idaho 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.