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 your behalf through an escrow account. But if the taxes aren't collected and paid through this kind of account, you 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, if you don't pay the real property taxes on your Missouri home, you'll likely face a tax sale, which is a public auction.
But the winning bidder at the sale doesn't immediately get ownership of the property. Many homeowners will get a year-long redemption period to get caught up on the overdue taxes—plus penalties, interest, and fees—before this happens. Though you might get less time, or no time, depending on the circumstances. Delinquent taxpayers who don't pay off the property taxes after the sale during the redemption period, however, will permanently lose ownership of their home.
Under Missouri law, when you don't pay your property taxes, the county collector is permitted to sell your home at a tax sale to pay the overdue taxes, interest, and other charges. (Mo. Ann. Stat. § 140.150, § 140.190). A tax sale must happen within three years, though state law permits an earlier sale if the taxes are delinquent. (Mo. Ann. Stat. § 140.160).
The tax sale consists of a public auction where the collector sells the home to the highest bidder, so long as the highest bid equals or exceeds the amount of the outstanding taxes, penalty, interest, and costs. (Mo. Ann. Stat. § 140.190). Delinquent land tax sales begin at 10:00 a.m. on the fourth Monday in August and run from day to day until all parcels are offered for sale. (Mo. Ann. Stat. § 140.150, § 140.170, § 140.190).
If no one bids the minimum amount at the sale, then the collector will hold a second sale the following year. (Mo. Ann. Stat. § 140.240). Tax sales are typically held annually. If no one bids the amount of the outstanding taxes, penalty, interest, and costs at the second offering, then the collector will hold a third sale. (Mo. Ann. Stat. § 140.250). If no one bids at this third sale, the collector is authorized to try to sell it at subsequent sales.
After a completed Missouri tax sale, instead of getting title to the property after the sale, the purchaser will get a certificate of purchase. (Mo. Ann. Stat. § 140.290). This certificate acts as evidence of the purchaser's interest in the property during the redemption period.
In most cases, the tax collector must:
You can prevent the tax sale from taking place by paying the delinquent taxes, penalty, interest, and costs at any time before the sale. (Mo. Ann. Stat. § 140.150).
Many states give delinquent taxpayers the chance to pay off the amounts owed and keep the home. This process is called "redeeming" the property.
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.
In Missouri, you can redeem the property:
You don't get a redemption period if someone purchases the home in a fourth or subsequent sale. (Mo. Ann. Stat. § 140.250). Minors, people who are incapacitated, and disabled persons get five years from the last tax payment date to redeem. (Mo. Ann. Stat. § 140.350).
If you don't pay off the debt during the redemption period, the purchaser can use the certificate of purchase to apply for and get a collector's deed (title) to your home. (Mo. Ann. Stat. § 140.420).
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 in a tax sale process, the process wipes out any mortgages. So, the loan servicer will usually advance money to pay delinquent property taxes. 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.
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 Missouri and have questions or need help redeeming your property, consider talking to a foreclosure lawyer, tax lawyer, or real estate lawyer.