If you’re a homeowner, but don’t pay your property taxes, you could potentially lose your home to a tax sale. Read on to learn more about how property tax sales work and how you may be able to save your home even after a tax sale occurs.
If you don’t pay your property taxes (or other municipal charges such as 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 the tax lien process to collect the delinquent taxes. (Learn more in Nolo’s article What Happens If You Don’t Pay Property Taxes on Your Home.)
Each state has different laws for tax sales. Most of the time, the taxing authority (usually the county) does not 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 (including information about the taxpayer, the property, and the amount due) with the recorder’s office and publishes a copy in the newspaper. The homeowner typically receives personal notice of the pending tax sale.
Then, in some places, there is 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 receives either a:
In some jurisdictions, however, there is no actual sale. The taxing authority simply executes its lien by taking title to the home.
In tax deed sales, the taxing authority sells full ownership and possession rights to the home. The purchaser at the sale gets title to the property.
A tax lien certificate sale, on the other hand, does not convey ownership of the property. Rather, the taxing authority sells its lien and the purchaser receives a tax lien certificate. This 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 are not paid by a certain date, the purchaser of the lien generally has a right to foreclose the lien (or take certain steps to convert the certificate to a deed) and take title to the home.
Even if your property goes to a tax sale, there are usually options available to you 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 home. 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 certain 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 may 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 certain time period you get to keep the home. This is also referred to as “redeeming” the home.
If you are facing an imminent tax sale, or one has already occurred, you should consult with an experienced attorney in your state as soon as possible. A qualified attorney 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.