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 Nebraska, you might eventually lose your home, or some portion of it, to a new owner at a tax sale. You will, however, get at least three years after the sale to make things right by getting caught up on the delinquent amounts.
If the taxes haven't been paid in full on or before the first Monday of March after they become delinquent, the property is subject to sale on or after that date. (Neb. Rev. Stat. § 77-1801.)
The property is sold at auction to the person who offers to pay delinquent taxes and costs for the smallest portion of the property. In some cases, a land bank provides an automatically accepted bid, becomes the purchaser, and no auction is held. (Neb. Rev. Stat. § 77-1807.)
Property remaining unsold after public auction is sold at private sale. (Neb. Rev. Stat. § 77-1814.)
After the sale, the purchaser who buys the property gets a "certificate of purchase" (a tax lien certificate.) (Neb. Rev. Stat. § 77-1818.) But, the purchaser can't get title to your home yet because Nebraska law institutes a waiting period called a "redemption" period (see below). (Neb. Rev. Stat. § 77-1819.)
You can pay off the debt and reclaim your property during this time. The certificate of purchase acts as evidence of the purchaser's interest in the property during the redemption period. If you don't pay off the tax debt during the redemption period, the purchaser can get title to your home.
Before the tax sale, the county treasurer must publish and post notice of the sale.
The county treasurer must publish a list of the property to be sold in a newspaper once a week for three weeks, beginning the first week in February. The list will also be published online. (Neb. Rev. Stat. § 77-1804.)
The treasurer must also post a copy of the notice in a conspicuous place in their office. A list of properties that will be sold is published on the Department of Revenue website. (Neb. Rev. Stat. § 77-1804.)
In Nebraska, you get at least three years after a tax sale, called a "redemption period," to pay off the tax debt and keep your property. (Neb. Rev. Stat. §§ 77-1837, 77-1902.) The purchaser must wait until the three-year redemption period expires before taking the necessary steps to get ownership of the home.
After the redemption period sale expires, the purchaser must either apply for a tax deed or foreclose to get title to the property. Which process the purchaser uses depends on the circumstances.
The purchaser may apply for a tax deed if 110% of the assessed value of the real estate described in the tax sale certificate, less the amount needed to redeem such real estate, is $25,000 or less. If this requirement isn't met, the purchaser must foreclose the lien. (Neb. Rev. Stat. § 77-1837.)
The purchaser can apply to the county treasurer for a tax deed at any time within nine months after the three-year redemption period expires. The county treasurer will then execute and deliver a deed to the purchaser, which gives the purchaser ownership of the property. (Neb. Rev. Stat. § 77-1837).
You can redeem the property up until the date of the tax deed application. You have up until the close of business on the day the county treasurer receives the tax deed application. (Neb. Rev. Stat. §§ 77-1824, 77-1837).
Instead of applying for a deed from the treasurer, the purchaser from the tax sale can file a complaint (lawsuit) in court to foreclose the tax lien represented by the certificate of purchase. The court will enter a judgment and hold a sheriff's sale. The purchaser at that sale then gets the title to your home. The foreclosure must be started within nine months after the three-year period expires. (Neb. Rev. Stat. § 77-1902).
You can redeem the property at any time up until final confirmation of the foreclosure sale. (Neb. Rev. Stat. § 77-1917).
The amount you'll have to pay to reclaim your home depends on when you redeem.
To redeem your Nebraska property following the tax sale, but before the purchaser applies for a tax deed or starts a foreclosure, you must pay the county treasurer:
To redeem your property after a foreclosure starts, you must pay the clerk of the district court:
To redeem your property after the foreclosure decree but before the court confirms the sale, you must pay the clerk of the district court:
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.
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, tax, or real estate lawyer if you're facing a tax sale in Nebraska and have questions about the process or need help redeeming your property.
To learn more about property taxes and other aspects of homeownership, get Nolo's Essential Guide to Buying Your First Home by Ilona Bray, J.D., Attorney Ann O'Connell, and Marcia Stewart.