What Happens If I Don't Pay Property Taxes in Utah?

What happens if you don’t pay your Utah property taxes? You might eventually lose your home.

By , Attorney

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 Utah, the county can sell your home to a new owner at a tax sale. But you'll have plenty of time to get current on the delinquent amounts before a sale occurs. However, you won't be able to get your home back afterward if you let the sale happen.

How Long Can You Go Without Paying Property Taxes in Utah?

After you're four years behind on your property taxes in Utah, the county can sell your home at an auction (a tax sale) to pay off the delinquent amounts. (Utah Code Ann. § 59-2-1343.)

The sale will take place in May or June. (Utah Code Ann. § 59-2-1351.)

How Property Tax Sales in Utah Work

The property is sold at public auction at the county courthouse or electronically. (Utah Code Ann. § 59-2-1351.)

Can Someone Take Your Property by Paying the Taxes in Utah?

At the auction, the winning bid must equal at least the amount of overdue taxes, tax notice charges, penalties, interest, and administrative costs. Sometimes, a bidder can offer an amount sufficient to pay the taxes, tax notice charges, penalties, interest, and administrative costs for less than the entire parcel to get title to only a portion of your property. (Utah Code Ann. § 59-2-1351.1.)

Once the county accepts the sale, the high bidder gets a tax deed (title) to your home. (Utah Code Ann. § 59-2-1351.1.) If no one bids on the home or bids a sufficient amount, the county gets title to the property. (Utah Code Ann. § 59-2-1351.3.)

Notice You'll Receive Before a Property Tax Sale in Utah

Before the sale, the county must send you a notice in the mail. (Utah Code Ann. § 59-2-1351.)

It must also publish the notice on the internet and in a newspaper for four weeks or post the notice in five public places if your area doesn't have a newspaper. (Utah Code Ann. § 59-2-1351.)

How to Stop a Utah Property Tax Sale By Paying the Delinquent Amounts

You can stop the sale by paying the delinquent taxes, tax notice charges, interest, penalties, and administrative costs before the sale. (Utah Code Ann. § 59-2-1346.)

Paying the overdue amount to stop the sale is called "redeeming" the property.

No Right of Redemption After a Utah Tax Sale

If you live in Utah and the county sells your home at a tax sale because you didn't pay your property taxes, you can't get your home back after the sale by redeeming it.

Some states have a law that gives a specified amount of time (called a "redemption period") during which homeowners can reclaim their home after a tax sale by paying the overdue taxes or reimbursing the purchaser for the amount paid at the sale. But Utah doesn't have a post-sale redemption period. (Utah Code Ann. §§ 59-2-1346, 59-2-1351.1.)

Following the sale, the high bidder (or the county if no one bids on the home at the auction) will get a deed (title) to your home. (Utah Code Ann. § 59-2-1351.1.)

Again, you have plenty of time to pay off the delinquent amounts before the tax sale takes place. And you might be able to get an adjustment or deferral of owed taxes.

How to Avoid Losing Your Utah Home to a Tax Sale

Under Utah law, you can apply to the county legislative body before the sale to get:

  • an adjustment (the county agrees to accept less than the full amount due to settle the debt), or
  • a deferral of the owed taxes. (A "deferral" means you'll have to pay the taxes sometime later.)

If the county agrees to defer the overdue taxes, the deferred amount is recorded as a lien on the home. The amount will accrue interest at a rate of the lesser of:

  • 6%, or
  • the federal funds rate that the Federal Open Markets Committee established on January 1 immediately preceding the deferral date. (Utah Code Ann. § 59-2-1347.)

What Happens to My Mortgage in a Tax Sale?

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.

The Servicer Might Pay Any Delinquent Taxes If You Don't

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, any mortgages get wiped out if you lose your home through a tax sale. 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.

If You Don't Reimburse the Servicer, You Might Lose Your Home to a Regular Foreclosure

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.

Your Servicer Might Set Up an Escrow Account

After demanding repayment of the amount it paid for the taxes, penalties, plus interest (assuming you repay this tax 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.

What Gives the Servicer the Right to Set Up an Escrow Account?

Many mortgages have a clause allowing the lender to establish an escrow account basically at any time. 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.

Pros and Cons of Having an Escrow Account

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 other bills, are due.

Getting Help

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 Utah and have questions about the process,

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.

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