Failing to keep up with the property taxes on your New York home can lead to a tax foreclosure. However, you'll get some time to make things right to prevent a tax foreclosure from going ahead.
During this time, called a "redemption period," you can pay all delinquent taxes and other charges to stop the foreclosure—a process known as "redeeming" the home. If your tax district allows it, you might be able to pay off your delinquent taxes over time by entering into an installment agreement.
And if you lose your home to a tax foreclosure, in rare circumstances, you might be able to get it back by filing a motion to reopen the default judgment or asking the court to set aside the tax deed.
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, you (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, effectively making the property collateral.
All states, including New York, have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes.
In New York, the taxing authority can foreclose its lien to collect the overdue amounts.
In New York, the tax foreclosure procedure is similar to the mortgage foreclosure process. A petition (lawsuit) is filed in court.
If you don't respond to the lawsuit by filing an answer that lists your objections to the case, the court will enter a default judgment against the property. A "default judgment" means you automatically lose because you didn't answer the suit.
Then, either the tax district gets possession of the property directly, or an auction is held to sell it. (N.Y. Real Prop. Tax Law §§ 1120, 1136.)
When the foreclosure petition is filed, a notice of foreclosure must be published in a newspaper (N.Y. Real Prop. Tax Law § 1124).
On or before the first date of publication, the enforcing officer must send you a notice by certified and first-class mail stating that the foreclosure has started. (N.Y. Real Prop. Tax Law § 1125.) The notice must specify the last day for redemption (see below) that's at least three months after the date of the first publication of this notice. (N.Y. Real Prop. Tax Law § 1124.)
If the mailings get returned, and there's no alternate address to send them to, the notice must be posted on the property. (N.Y. Real Prop. Tax Law § 1125.)
The notice will specify, among other things, the last day that you can redeem (see below) the property. (N.Y. Real Prop. Tax Law § 1125.)
In New York, you get some time to save your home from a tax foreclosure. During this period (called a "redemption period"), you can pay all delinquent taxes and other charges to stop the foreclosure—a process known as "redeeming" the home.
To redeem the property, you'll have to pay the amount of the delinquent tax lien or liens, including all charges authorized by law before the redemption period expires. (N.Y. Real Prop. Tax Law § 1110.)
Generally, the redemption period expires two years after the lien date. (N.Y. Real Prop. Tax Law § 1110.)
But the redemption period might be longer than two years after the lien date if:
The foreclosure proceeding generally starts around three months before the redemption period expires. (N.Y. Real Prop. Tax Law § 1124.)
On the flip side, the tax district may reduce the redemption period to one year for residential vacant and abandoned property if the property has been placed on a vacant and abandoned roll, registry, or list prior to the date on which taxes become delinquent in the local municipality. (N.Y. Real Prop. Tax Law § 1110.)
New York law also permits the owner to redeem until:
Again, the foreclosure proceeding generally starts around three months before the redemption period expires. (N.Y. Real Prop. Tax Law § 1124.)
If your tax district allows it, you might be able to pay off your delinquent taxes over time by entering into an installment agreement. The term of the agreement can't be longer than 36 months. You'll have to make a down payment, though no more than 25% of the eligible delinquent taxes. (N.Y. Real Prop. Tax Law § 1184.)
You're not eligible to enter into an installment agreement, though, if:
If you lose your home to a tax foreclosure, depending on the circumstances, you might be able to get it back by taking one of the following legal actions.
If you don't redeem or file an answer to the lawsuit, you might be able to reopen a default judgment in rare circumstances. To do this, you must file a motion stating the reasons why the judgment should be reopened, like showing a very good reason why you failed to respond to the suit, no later than one month after the court enters its judgment. (N.Y. Real Prop. Tax Law § 1131.)
You might, in some limited situations, be able to invalidate a tax foreclosure and the resulting tax deed that gave title to a new owner. For example, if you weren't given proper notice of the foreclosure, you could ask the court to set aside (invalidate) the deed. You must start the proceeding to object to the deed within two years after the tax deed is recorded. (N.Y. Real Prop. Tax Law § 1137.)
If you're having trouble paying your property taxes, you might be able to reduce your tax bill or get extra time to pay.
Be aware that New York's tax foreclosure laws covering redemption, as well as reopening a default judgment or setting aside a sale, are complicated. To find out the deadline for redeeming your property in a New York tax foreclosure or if you want to reopen a default judgment or set aside a tax deed, you should consult with an attorney, such as a foreclosure lawyer, a real estate lawyer, or a tax lawyer who has experience in property tax matters.