If you fail to keep current on your property taxes or other municipal charges, like a sewer or water bill, the past-due amount becomes a lien on your home. All states have laws that allow the local government to then sell your home through a tax lien process to collect the delinquent taxes.
In this article, you'll learn about how property tax sales work and how you might be able to save your home even after a tax sale happens.
Each state has different laws for tax sales. Generally, the taxing authority, usually the county, doesn't have to go to court before holding a tax sale. Instead, the process is often started when the taxing authority files a list of delinquent taxes, which includes information about the taxpayer, the property, and the amount due, with the recorder’s office and publishes a copy in the newspaper. Also, the homeowner typically is entitled to some form of notice of the pending tax sale.
Then, in some places, the county holds a public auction. Commonly, bidding begins at the amount that covers the delinquent taxes, interest, and related penalties that are owed to the taxing authority. The winning bidder at the sale normally receives either a:
In some jurisdictions, though, a sale isn't held. The taxing authority simply executes its lien by taking title to the home. In other places, the taxing authority must foreclose the property, usually by filing a lawsuit in court, before holding a tax sale.
In tax deed sales, the taxing authority sells the title to the home.
A tax lien certificate sale, on the other hand, doesn't convey ownership of the property. Rather, the taxing authority sells its lien and the purchaser usually receives a tax lien certificate. This certificate entitles the purchaser to basically take over the position of the taxing authority and collect full payment of the past-due taxes, plus interest, from the delinquent taxpayer.
If the delinquent taxes aren't paid by a certain date, the purchaser of the lien generally has a right to foreclose the lien, or take specific steps to convert the certificate to a deed, and get title to the home.
Even after your property goes to a tax sale, you might have options available to save the home.
You might be able to reclaim your home after a tax deed sale by redeeming it or setting aside the sale.
Redeeming the property. Most jurisdictions that sell tax deeds offer a right of redemption after the sale, which allows you to get your home back. To redeem, you must reimburse the purchaser the amount paid at the sale, or pay the taxes owed, plus interest within a specific time frame called a "redemption period," which is generally between one to three years. Sometimes, the redemption period takes place before the sale. If you pay the delinquent taxes before the start of the sale, the sale will not take place.
Setting aside the sale. If you can’t redeem the home, you might be able to set aside (invalidate) the tax sale after it has occurred by showing, for example:
After a tax lien sale, you still own the home because the purchaser only buys a lien against your property. If you pay off the amount of the lien, plus interest, within a specified time period you get to keep the home. This, too, is referred to as "redeeming" the home.
If you're facing an imminent tax sale, or one has already occurred, consider talking to an experienced attorney in your state as soon as possible. A qualified foreclosure lawyer, tax lawyer, or real estate lawyer can answer your questions about how the process works where you live and the specific steps you need to take to save your home from a tax sale.