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 Nevada, the county can eventually get the deed (title) to your home. But you'll have plenty of time to get paid up on the overdue amounts before this happens. If you don't get current, though, after the county gets the property's title, it can then sell your home to a new owner at a tax sale.
In Nevada, property taxes are due on the third Monday in August. But you can pay the taxes in installments if your taxes are more than $100.00. (Nev. Rev. Stat. §§ 361.482, 361.483.)
If you pay in installments, the payment schedule is:
When you don't pay your property taxes, the tax receiver will let you know that you must get current (see "Notice to the Nevada Homeowner Before Certification" below). If the amount owed isn't paid by 5 p.m. on the first Monday in June, the County Treasurer, as trustee for the state and county, gets a certificate that authorizes it to hold the property for two years. (Nev. Rev. Stat. §§ 361.570, 361.5648.)
During the two-year waiting period, called a "redemption period" (see below), you can pay off what you owe to save your home. If you don't get caught up, the county receives a deed to your home and can sell it to a new owner. (Nev. Rev. Stat. § 361.590.).
Before issuing a certificate to the county, the tax receiver must mail you a notice within 30 days after the first Monday in March. This notice lets you know that the county treasurer will get the certificate subject to the two-year redemption period if you don't get paid up. (Nev. Rev. Stat. § 361.5648.)
A notice will also be published in a newspaper or posted publicly if the county doesn't have a newspaper. The notice is also put on a website. (Nev. Rev. Stat. § 361.565.)
The redemption period before the county can sell your home at a tax sale is two years after the certificate is issued. (However, the redemption period for an abandoned property is one year.) (Nev. Rev. Stat. §§ 361.5648, 361.570.)
During the redemption period, you get the right to pay off the debt and prevent a tax sale, called "redeeming" the home.
To redeem your home, you must pay the taxes, penalties, costs, and interest on the taxes at the rate of 10% per year. (Nev. Rev. Stat. § 361.5648.)
The receiver must send you a notice at least 60 days before the redemption period expires. (Nev. Rev. Stat. § 361.5648.)
The county must send you a notice by certified mail at least 90 days before the sale takes place. At least 20 days before the sale, notice must also be posted publicly, including one notice at the courthouse and one on the property, or published in a newspaper. (Nev. Rev. Stat. § 361.595.)
If you don't redeem the property, the receiver issues a deed to the county treasurer as trustee for the state and county, and the county may then sell the property. (Nev. Rev. Stat. §§ 361.590, 361.595.)
The tax sale is usually a public auction where the home is sold to the highest bidder. The winning bid must be at least as much as the amount of taxes, costs, penalties, and interest due. (Nev. Rev. Stat. § 361.595.)
If the county sells your home at a tax sale, you might be able to get your home back by filing a lawsuit to protest the sale. However, you'll be able to do this only if you have a valid reason to dispute the sale.
You must file the suit within two years after the new owner gets a deed (title) to the home. (Nev. Rev. Stat. § 361.600.) Talk to a lawyer if you want to get your home back after a new owner receives a deed to the property.
If you have a mortgage on your home, the loan servicer might collect money from you as part of the monthly payment to 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, a completed tax sale process wipes out any mortgages. So, the loan servicer will usually advance money to pay delinquent property taxes to prevent this sale 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, and interest (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 perhaps 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 possibly other bills, 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 Nevada 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.