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

If you don't pay your real property taxes in Oregon, you might lose your home to tax foreclosure. Fortunately, you'll find out about the tax foreclosure before it happens, and you'll have the chance to get current on the delinquent amounts, plus interest and costs, to prevent the loss of your property.

And even if you let the foreclosure go through to a judgment, you'll get some time afterward to reclaim the property by "redeeming" it (see below).

What Are the Consequences of Not Being Able to Pay Taxes in Oregon?

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 Oregon, you might lose your home to tax foreclosure.

How Does Oregon Handle Tax Non-Payment?

In Oregon, property taxes that aren't paid on or before May 15 of the tax year in which they're billed are delinquent. The property is subject to a tax foreclosure three years after the first date of delinquency. (Or. Rev. Stat. § 312.010, § 312.050.)

The county prepares a list called a "foreclosure list" of all properties subject to foreclosure. It then applies for a judgment with the court and publishes the foreclosure list in a newspaper. (Or. Rev. Stat. § 312.030.)

Once the court issues a judgment of foreclosure, the redemption period (see below) begins. If you don't pay off the taxes, interest, fees, and penalties during the redemption period, the tax collector will deed your home to the county. (Or. Rev. Stat. § 312.200.) At this point, you lose all rights to the property, and the county may choose to sell it to a new owner.

Will I Get Notice of a Tax Foreclosure in Oregon?

Before the tax foreclosure, the county where your property is located must either send you notice by both regular and certified mail or personally serve you notice. (Or. Rev. Stat. § 312.040.)

Also, if notice is sent by mail, the foreclosure will be published in a newspaper of general circulation in the county. (Or. Rev. Stat. § 312.040.) But it will probably be buried in the fine print—you're not likely to run across it.

Responding to a Tax Foreclosure in Oregon

You can file an answer to the foreclosure with any defenses you want to raise, like you actually paid the taxes. You must file your response within 30 days after the foreclosure list is first published, excluding the first day of publication. (Or. Rev. Stat. § 312.070.)

If you don't have a valid defense, you'll have to get caught up on what you owe before the judgment to stop the foreclosure. Before the foreclosure list is published, you can get your home out of foreclosure by paying the delinquent taxes and interest or penalty accrued. After the list is published, you can stop the foreclosure proceeding at any time before the court issues a judgment by paying the delinquent taxes, plus interest and a penalty of 5% of the total amount of taxes and interest charged against the property. (Or. Rev. Stat. § 312.110.)

How to Redeem the Property After a Tax Foreclosure

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

How Long Is the Redemption Period After a Tax Foreclosure in Oregon?

In Oregon, you get two years, called a "redemption period," after the foreclosure judgment to pay off the delinquent taxes, plus interest, penalty, and fees, to prevent the county from getting your home. (Or. Rev. Stat. § 312.120, § 312.200.)

But if you don't redeem, the county will get a deed (title) to your home. (The Oregon tax foreclosure procedure doesn't involve a tax sale or auction.)

Again, your right to redeem the property expires on the execution of the deed to the county. (Or. Rev. Stat. § 312.200.) Once the property is deeded to the county, your ownership rights are terminated. After the county gets the title to your home, it will probably sell the property to a new owner. (Or. Rev. Stat. § 312.270.)

How Much It Costs to Redeem in Oregon

During the two-year redemption period, you can redeem by paying:

• the full amount of the foreclosure judgment
• interest
• a penalty of 5%, and
• a fee of $50 or the actual cost to the county for a title search and other expenses related to obtaining a title search, whichever is greater. (Or. Rev. Stat. § 312.120.)

Notice of Expiration of Redemption Period

Not less than one year before your right to redeem ends, the tax collector must mail you a notice that includes the redemption period's expiration date. (Or. Rev. Stat. § 312.125.)

In most cases, the tax collector must also publish a general notice in the newspaper about when the redemption period expires. The publication must occur no more than 30 days or less than 10 days before the expiration date. (Or. Rev. Stat. § 312.190.)

Who Gets Possession of the Home During the Redemption Period

You can live in the home during the redemption period. But you'll forfeit your right to live there if you commit waste (that is, you cause damage that lowers the home's value) or move out. (Or. Rev. Stat. § 312.180.)

Reduced redemption period if you commit waste. If you damage your home during the redemption period, you'll forfeit the remaining time you have in which to redeem. (Or. Rev. Stat. § 312.122.)

Reduced redemption period if you move out of the home. In addition, the redemption period can end early if:

• you abandon (move out of) the home for more than six months and
• the property has suffered a substantial depreciation in value or will suffer a substantial depreciation in value if not occupied. (Or. Rev. Stat. § 312.122.)

Your right to a hearing to determine waste or abandonment. If the county determines that your property may be damaged or abandoned, it will set a date, time, and place for a hearing to determine whether the property should be deeded to the county. When the county determines that a home is subject to waste or has been abandoned, the property will be deeded to the county after 30 days. You can still redeem during these 30 days. (Or. Rev. Stat. § 312.122.)

You could also face penalties. If you commit waste of the property, you could be fined in an amount of not less than twice the value of the damages. (Or. Rev. Stat. § 312.990.)

Repurchasing Your Home After the County Gets Title

If you don't redeem and the county gets the title to your home, it will probably sell the home to a new owner. (Or. Rev. Stat. § 312.270.)

The county might allow you to repurchase the home, but not for less than the total amount of taxes and interest due at the time the county acquired the property, plus 6% interest. (Or. Rev. Stat. § 275.180.)

Does a Mortgage Survive a Tax Foreclosure in Oregon?

Because a property tax lien has priority, mortgages (and deeds of trust) get wiped out if you lose your home through a tax foreclosure process. So, If your loan isn't escrowed and you fail to pay the property taxes like you're supposed to, the loan servicer will usually advance money to pay delinquent property taxes to prevent a tax sale from happening.

Most mortgages have a clause allowing the lender to add the amount it paid to bring the taxes current to your loan balance. You'll then have to make repayment arrangements with the servicer or potentially face a foreclosure by your lender.

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. For example, you might qualify for a property tax deferral.

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