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

Your Louisiana property, or a portion of it, could be sold at a tax sale to pay off a delinquent tax bill.

By , Attorney

People who own real property have to 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 is a claim against your property to ensure you'll pay the debt; it 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 Louisiana, failing to pay your property taxes will lead to a tax sale. At the auction, your property or a portion of it will be sold to pay off the delinquent tax bill.

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 that happens. If you don't pay off the debt during what's called a "redemption period" after the sale, though, you'll lose the property permanently.

How Louisiana Tax Sales Work

In Louisiana, tax sales occur annually, typically in May or June. Under Louisiana law, the sale may consist of a "bid down" process in which the collector sells the least amount of the property that someone will buy for the full amount due with bidding starting at 100% of the property. Bidding may continue down to 1%. (La. Rev. Stat. Ann. § 47:2153).

As an alternative, upon agreement between the tax collector and the local governing authority, a bidder may elect to bid down the redemption penalty rate. (La. Rev. Stat. Ann. § 47:2153). (Basically, the purchaser can elect to bid down the 5% penalty that you'll have to pay if you want to get your home back after the sale. This penalty rate is covered in more detail below.)

After the sale, the tax collector will file a tax sale certificate in the public records. (La. Rev. Stat. Ann. § 47:2155). The tax sale certificate transfers what's called "tax sale title" only, which means the buyer gets limited ownership of the property, subject to the right of redemption (see below). (A tax sale certificate in Louisiana is basically the same as a tax deed, as described in the Louisiana Constitution.)

Notice of a Louisiana Tax Sale

Before the sale, the tax collector must provide notice by mail and publication.

Notice By Mail

No later than the first Monday of February of each year, or as soon thereafter as possible, the collector will mail you (the taxpayer) a notice saying that you must get caught up on the delinquent amounts within 20 days or as soon thereafter before the tax sale is scheduled. Otherwise, the parish or other political subdivision will proceed with a tax sale and sell the property to a new owner. (La. Rev. Stat. Ann. § 47:2153).

However, a tax sale is still valid, even if you don't receive actual notice of the sale, if the collector demonstrates a reasonable and diligent effort to provide notice of the sale. (La. Rev. Stat. Ann. § 47:2153).

After the property goes to tax sale and within 90 days of the expiration of the redemption period, the tax collector must provide written notice by first class mail that the property has been sold at a tax sale and that after the expiration of the redemption period, the property can't be redeemed. (La. Rev. Stat. Ann. § 47:2153).

Notice By Publication

At least 20 days after sending you the written notice, the collector must publish notice about the sale two times within 30 days in an official journal, such as a newspaper. (La. Rev. Stat. Ann. § 47:2153).

How to Stop a Tax Sale From Happening in Louisiana

You can stop the sale from taking place by paying the amounts due at any time up until the day before the actual sale. (La. Rev. Stat. Ann. § 47:2153).

At the time of tax sale, you may pay the amounts due plus interest and costs due at the time of the sale, and that payment counts as a redemption. (La. Rev. Stat. Ann. § 47:2163).

How to Redeem the Property

Many states give delinquent taxpayers the chance to pay off the amounts owed and keep the home. This process is called "redeeming" the property.

How the Right to Redeem Usually Works

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, though, the redemption period happens before the sale.

Redemption Period in Louisiana

In Louisiana, you generally get three years after the date the tax sale certificate was recorded to redeem your property. (La. Const. Art. VII, § 25). But under some circumstances, the redemption period is shorter.

To redeem, you must pay the price the purchaser paid for the property at the sale, plus costs, a 5% penalty—or less if the purchaser has bid down the penalty rate at the sale—and 1% interest per month. (La. Rev. Stat. Ann. § 47:2153).

After three years, the purchaser can file a lawsuit to quiet the title, which provides the purchaser with clear title and full ownership of the property. (La. Const. Art. VII, § 25).

Does a Mortgage Survive a Tax Sale Process in Louisiana?

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

Your Servicer Might Set Up an Escrow Account

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 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.

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. If you're already facing a property tax sale in Louisiana and have questions or need help redeeming your property, consider talking to a foreclosure lawyer, tax lawyer, or real estate lawyer.

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