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

If your Ohio property taxes are delinquent, you could lose your home after a tax lien sale or through a tax foreclosure.

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, if you get behind in paying your real property taxes in Ohio, you'll most likely face a tax lien sale or a tax foreclosure. You'll get notice before either of these sales happen, as well as the opportunity to get caught up on the delinquent amounts plus interest, fees, and costs. If you aren't able to pay up, though, you'll eventually lose ownership of your home permanently.

How Tax Sales Generally Work

In a tax lien sale, the taxing authority sells the tax lien, and the purchaser gets the right to collect the debt along with penalties and interest. If the delinquent amounts aren't paid, the purchaser can typically foreclose or follow other procedures to convert the certificate to a deed.

In some jurisdictions, though, a sale isn't held. Instead, the taxing authority executes its lien by taking title to the home. State law then generally provides a procedure for the taxing authority to dispose of the property, usually by selling it. In other jurisdictions, the taxing authority uses a foreclosure process before holding a sale or the tax collector sells the property itself.

How Tax Lien Sales and Tax Foreclosures in Ohio Work

In Ohio, once a tax lien attaches to the property, the county treasurer can then either sell the lien (and whoever purchases the lien may foreclose after a certain amount of time passes) or the county treasurer may foreclose.

How Ohio Tax Lien Sales Work

Under Ohio law, the county treasurer may choose to sell tax liens at an auction or, in some cases, in a negotiated sale (a private sale). The county treasurer must mail you a notice before a tax lien sale. It must also publish the notice of sale in a newspaper. (Ohio Rev. Code § 5721.31).

At a tax lien auction, the winning bidder is whoever bids the lowest rate of interest on the debt. (Ohio Rev. Code § 5721.32). After the sale, the purchaser gets a tax certificate and becomes the owner of the lien. After the one-year redemption period (see below) expires, whoever purchases the lien may foreclose. (Ohio Rev. Code § 5721.37).

How Ohio Tax Foreclosures Work

Instead of selling the tax lien, the county treasurer may start a foreclosure against you in court. (Ohio Rev. Code § 5721.18). The court will enter a judgment and order the home sold at auction to satisfy the tax debt. After the court confirms the sale, the winning bidder gets a deed to the home. (Ohio Rev. Code § 5721.19).

When the county treasurer files the foreclosure with the court, you'll get a copy of the complaint (the lawsuit) and a summons.

Once the court orders a sale, notice of the sale must be published in a newspaper once a week for three weeks. (Ohio Rev. Code § 5721.19). Within 30 days after filing the complaint and before the final date of publication of the notice of foreclosure, the clerk of the court also mails a notice to each person named as a defendant in the complaint, like the last known homeowner and lienholders. (Ohio Rev. Code § 5721.18).

How to Redeem the Property After a Tax Sale

Many states give delinquent taxpayers the chance to pay off the amounts owed and keep the home, even after a tax sale happens. 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.

Right to Redeem After an Ohio Tax Lien Sale

After an Oho tax lien sale, you get at least one year to pay off all lien charges and interest. (Ohio Rev. Code § 5721.38). Once the one-year redemption period expires, the tax-lien purchaser can foreclose on your Ohio home by filing a lawsuit in court. As part of the foreclosure, the home will be sold to satisfy the debt. You can still redeem up until the court confirms the foreclosure sale, which finalizes the foreclosure. (Ohio Rev. Code § 5721.38).

Right to Redeem During an Ohio Tax Foreclosure

You can stop a tax foreclosure by the county and save your home at any time before the court confirms the sale by paying the taxes, assessments, penalties, interest, fees, and court costs. (Ohio Rev. Code § 5721.25). After the Ohio court confirms the sale, however, you lose ownership of the property.

Does a Mortgage Survive a Tax Foreclosure in Ohio?

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 foreclosure, 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 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 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.

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 tax lien sale or tax foreclosure in Ohio 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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