People who own real property must pay property taxes. The government uses the money that 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. If you have a mortgage on your home, the loan servicer might collect money from you as part of the monthly mortgage payment to later pay the property taxes. The servicer pays the taxes on the homeowner's behalf through an escrow account. But if the taxes aren't collected and paid through this kind of account, the homeowner must pay them directly.
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. Accordingly, in Georgia, failing to pay your real property taxes generally leads to a tax sale. But the winning bidder from the sale can't get ownership of your home right away; you'll get some time to get caught up on the overdue amounts before this happens.
If you don't pay the delinquent taxes that are due, the sheriff may eventually:
This article focuses on nonjudicial tax sales because it's the most common type of tax sale process in Georgia. (Generally, the judicial tax sale process is used for abandoned and blighted properties.)
If you don't pay the taxes, you'll get a letter from the tax collector stating that you're behind and giving you 30 days to get caught up. (Ga. Code Ann. § 48-3-3). If you don't pay, you'll get a notice by personal delivery, registered mail, or overnight delivery, 20 days before the sheriff publishes notice of the sale in a newspaper. (Ga. Code Ann. § 48-3-9, § 48-3-10). Properties to be auctioned for delinquent taxes are advertised for four weeks. (Ga. Code Ann., § 9-13-141). Then, you'll get one more notice by registered or certified mail or overnight delivery ten days before the sale. (Ga. Code Ann. § 48-4-1).
At the sale, the sheriff sells the home to the highest bidder. If no one bids an amount sufficient to cover the past-due amounts, including costs, the county may bid and purchase the home. (Ga. Code Ann. § 48-4-20). After the sale, the high bidder (the purchaser) gets a deed to the home, subject to your right of redemption (see below). (Ga. Code Ann. § 48-4-6, § 48-4-40). After the redemption period expires, the purchaser may foreclose the right of redemption (see below), which prevents anyone from redeeming. The purchaser then gets ownership of the home.
The purchaser will automatically get title to the property four years after the date the tax deed was recorded if the property isn't redeemed, even if the purchaser doesn't formally foreclose the right of redemption. (Ga. Code Ann. § 48-4-48).
In many states, the homeowner can redeem the home after a tax sale by paying the buyer from the tax sale the amount paid (or by paying the taxes owed), plus interest, within a limited amount of time. Exactly how long the redemption period lasts varies from state to state, but usually, the homeowner gets at least a year from the sale to redeem the property.
In other states, the redemption period happens before the sale.
In Georgia, homeowners who lose their property to a tax sale get a 12-month redemption period afterward. Redeeming the property will prevent the purchaser from getting title to your property. To redeem, you have to pay the purchase price, plus some additional amounts. (Ga. Code Ann. § 48-4-40).
One year from the tax sale date, the purchaser may foreclose the right of redemption and forever bar anyone from redeeming the property. To foreclose the right of redemption, the purchaser gives you written notice that your right will expire on a specific date. (Ga. Code Ann. § 48-4-46). The purchaser also publishes the notice in a newspaper. (Ga. Code Ann. § 48-4-45). If you don't redeem within the initial 12-month period or within the time allowed under the notice, your interest in the property is forever canceled.
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, if your home is sold through a tax sale, the sale wipes out any mortgages. So, the loan servicer will usually advance money to pay delinquent property taxes to prevent this 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 terms of the mortgage, and the servicer can 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, plus interest (and 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 usual 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.
The downside to having an escrow account is that you'll have to make a bigger payment to the servicer each month. 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.
If you're having trouble paying your property taxes, you might be able to reduce your tax bill or get extra time to pay. If you're already facing a property tax sale in Georgia and have questions or need help redeeming your property, consider talking to a foreclosure lawyer, tax lawyer, or real estate lawyer.