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 New Hampshire, you might lose your home (or a portion of it) to a tax sale or to the municipality through an alternative procedure. But you'll have some time to pay off the debt and keep the property.
Again, if you don't pay your property taxes, the past-due amount becomes a lien on your home. Each state has a different tax sale process to collect delinquent taxes.
New Hampshire is generally considered a tax deed state.
In some places, if the homeowner doesn't pay off the debt, the taxing authority sells the home. But the purchaser might not get the deed to the property right away. Sometimes, a redemption period must expire before the buyer gets 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.
And in other places, a tax foreclosure process is used, or the taxing authority simply executes its lien by taking title to the home.
If you don't pay your property taxes by December 1 following their assessment, the taxes are considered delinquent. (N.H. Restat. Ann. §§ 80:20, 80:59.)
When property taxes in New Hampshire are delinquent, the tax collector will eventually take steps to collect the delinquent amounts by:
Below is a summary of both processes. To find out what specific procedures are used where you live, consult with an attorney in your area.
In some places in New Hampshire, the municipality can hold a tax sale and sell your home, or a percentage of it, to collect the unpaid taxes. (N.H. Restat. Ann. §§ 80:20, 80:24.) New Hampshire property tax sales are public auctions. (N.H. Restat. Ann. § 80:24.)
You would then get two years, called a "redemption period" (see below), to pay off the debt. If you fail to do so, the purchaser gets the property's title and becomes the new owner of your home. (N.H. Restat. Ann. § 80:38.)
Before the sale takes place, the collector must:
At the sale, the home is sold for the percentage of the common and undivided interest that a bidder is willing to offer for the amount of the unpaid tax, interest, and costs due thereon. (N.H. Restat. Ann § 80:24).
You may pay the taxes and other property charges before the sale. (N.H. Restat. Ann. § 80:33.)
If your New Hampshire home is sold at a tax sale, you will get two years after the sale to pay off the debt and keep your home (called "redeeming" the property). (N.H. Restat. Ann. §§ 80:32, 80:38.).
If you don't get caught up within the two years, the purchaser who bought the home at the sale can get a deed (title) to your property. (N.H. Restat. Ann. §§ 80:32, 80:38.)
You may redeem at any time before the collector issues the deed to the purchaser. (N.H. Restat. Ann. § 80:32.)
At least 30 days before the purchaser gets the deed, you'll get a notice by certified mail letting you know about the impending deeding. If you redeem, you'll prevent the purchaser from getting ownership of your property. (N.H. Restat. Ann. § 80:38-a.)
To redeem your New Hampshire home after a property tax sale, you will need to pay:
Under New Hampshire law, you can redeem by making partial payments in the amount of $5 or multiples thereof to the tax collector during the two-year redemption period. (N.H. Restat. Ann. § 80:33-a.)
But if you don't pay the full amount needed to redeem before the purchaser who bought your home at the tax sale gets the deed to the property at the end of the redemption period, you'll lose your chance to redeem. You'll get a refund of the amounts you paid. (N.H. Restat. Ann. § 80:33-a.)
In other areas of New Hampshire, the municipality (or county or state, in some cases) will use an alternative tax lien procedure if it has adopted the legal provisions describing this procedure. (N.H. Restat. Ann. § 80:59.)
Once the procedure is complete, the municipality gets the title to your property. (N.H. Restat. Ann. § 80:76.)
To get ownership of your home through the alternative tax lien procedure, the municipality must "perfect" a lien on your home. "Perfecting" a lien means taking certain actions or following particular procedures to create an enforceable security interest.
To perfect the lien, the tax collector must mail you a notice of the impending lien at least 30 days before executing the lien. (N.H. Restat. Ann. § 80:60.) "Execution" means that the lien is transferred over to the municipality.
If the taxes remain unpaid for two years from the execution of the tax lien, the tax collector deeds the property to the municipality. (N.H. Restat. Ann. § 80:76.)
The collector will send you a notice by certified mail, return receipt requested, at least 30 days before the deed is issued. (N.H. Restat. Ann. § 80:77.)
Once the collector deeds the property to the municipality, the municipality can sell the home to a new owner.
To redeem your New Hampshire home before the municipality gets a deed to the property, you must pay the collector:
Under New Hampshire law, you can make partial payments to redeem after the municipality gets a tax lien. (N.H. Restat. Ann. § 80:71.)
But if you don't pay the full amount needed to redeem before the municipality gets a deed to the property, you'll lose ownership of your home. You'll get a refund of the amounts you paid. (N.H. Restat. Ann. § 80:71.)
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 allowing 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 the loss of your home due to unpaid property taxes in New Hampshire 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.