People who own real property must pay property taxes. The government uses these taxes 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 Maryland, the tax collector can sell your property at a tax sale.
However, you'll get a fair warning before a tax sale and the chance to get your home back afterward. Under Maryland law, most people get at least six months to reclaim (or "redeem") the property even after someone else buys it at a tax sale.
When you don't pay your property taxes, the past-due amount becomes a lien on your home. This type of lien almost always has priority over other liens, including mortgages. (See "What Happens to My Mortgage in a Tax Sale" below.)
Each state has a different tax sale process to collect delinquent taxes.
In some places, the taxing authority sells the home if the homeowner doesn't pay off the debt. However, the purchaser might not get the deed to the property right away. Sometimes, a redemption period must expire before the buyer receives the deed.
In other places, the taxing authority sells the tax lien, and the purchaser must foreclose or use different procedures to get a deed to the property.
In Maryland, the winning bidder at the tax sale gets a certificate of sale (basically, a tax lien certificate). (Md. Code Ann., Tax-Prop. § 14-820.) If you don't pay off the delinquent taxes during the redemption period, the purchaser will foreclose your right of redemption (see below) and get title to your home.
And sometimes, a tax foreclosure process is used, or the taxing authority simply executes its lien by taking title to the home.
If your property taxes remain delinquent for a sufficiently long amount of time, your property will be sold off in a tax sale. (Md. Code Ann., Tax-Prop. § 14-808.)
At the tax sale, a public auction, the property will usually be sold to the highest bidder willing to pay at least the total amount of all taxes due, along with interest, penalties, and expenses related to the sale. (Md. Code Ann., Tax-Prop. § 14-817.)
After the sale, the winning bidder gets a certificate of sale (basically, a tax lien certificate). (Md. Code Ann., Tax-Prop. § 14-820.)
But the winning bidder can't get ownership of your home right away. Maryland law establishes a waiting period called a "redemption" period. During the redemption period, you can pay off the debt. The certificate of sale acts as evidence of the winning bidder's interest in the property during the redemption period.
If you don't pay off the delinquent taxes during the redemption period, the purchaser will foreclose your right of redemption and get title to your home.
The collector must mail you a notice at least 30 days before publishing a notice about the sale. The notice must have a statement that the property will be sold if the arrears aren't paid within 30 days of notice. (Md. Code Ann., Tax-Prop. § 14-812.)
The tax collector must also publish a notice in a newspaper that includes, among other things, the date and place of the sale. (Md. Code Ann., Tax-Prop. § 14-813.)
If you want to stop a Maryland property tax sale from happening, you must pay the overdue amounts. Again, you'll get a notice saying the property will be sold if the arrears, interest, and penalties aren't paid. (Md. Code Ann., Tax-Prop. § 14-812.)
Within 60 days after the tax sale, the collector must send you a notice by mail that includes information about the sale and about your right to redeem the home following the sale. (Md. Code Ann., Tax-Prop. § 14-817.1.)
If you lose your home to a tax sale in Maryland, you can redeem it at any time before your right of redemption is foreclosed. (Md. Code Ann., Tax-Prop. § 14-827.) But if you don't redeem it, you'll lose the home to the person or entity that bought it at the tax sale.
The purchaser must generally wait six months before foreclosing your right of redemption. (Md. Code Ann., Tax-Prop. § 14-833.) So, Maryland homeowners generally get at least six months after the sale to redeem the home. These six months are called a "redemption period."
In Baltimore City, the redemption period is nine months from the date of sale for owner-occupied residential properties. (Md. Code Ann. Tax-Property § 14-833.) During this time, you can pay off the tax debt and prevent the purchaser from getting the title to your property.
In some cases, the winning bidder can start the foreclosure process sooner. For instance, a person or entity that purchases a certain type of abandoned property or vacant property, or when the governing body of a county or municipal corporation becomes the holder of a certificate of sale, the foreclosure can start at any time after the sale date. (Md. Code Ann., Tax-Prop. § 14-833.)
If the home needs substantial repairs or will need substantial repairs within six months to comply with the local building code, the purchaser might, depending on the circumstances, be able to start the foreclosure at any time after 60 days from the sale date. (Md. Code Ann., Tax-Prop. § 14-833.)
Usually, the winning bidder must give you two notices before it starts the foreclosure. The winning bidder can't begin the foreclosure until at least two months after sending you the first notice and at least 30 days after sending the second notice. (Md. Code Ann., Tax-Prop. § 14-833.)
To start the foreclosure, the winning bidder must file a lawsuit in court. (Md. Code Ann., Tax-Prop. § 14-833.)
The foreclosing purchaser gets a deed to the home after a court enters a decree foreclosing the right of redemption. (Md. Code Ann., Tax-Prop. § 14-847.)
If the winning bidder doesn't start the foreclosure within two years after the date of the certificate of sale, the certificate becomes void, and the bidder loses all rights to your property. (Md. Code Ann., Tax-Prop. § 14-833.)
At this point, your property will probably be sold at another tax sale if you don't get caught up on the overdue amounts.
To redeem your home after a tax sale, you must pay the County or Baltimore City the redemption amount. This payment has to be in certified funds, like a cashier's check or a bank money order.
Again, you must pay the redemption amount to redeem the property after a tax sale. The redemption amount is generally:
The amount will vary depending on how long you wait to redeem. The longer you hold off on redeeming, the more you'll pay.
Again, you can redeem until your right of redemption has been finally foreclosed. (Md. Code Ann., Tax-Prop. § 14-827, § 14-833.)
Because a property tax lien has priority, mortgages (and deeds of trust) get wiped out if you lose your home through a tax sale 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.
Talk to a foreclosure lawyer, tax lawyer, or real estate lawyer if you're facing a tax sale and foreclosure in Maryland and have questions about the process or need help redeeming your property.