In many cases, a mortgage lender will establish an escrow account through which property taxes are paid. This means that additional funds are paid by the borrower to the lender for property taxes in addition to interest and the principal – all this equates to a monthly payment. Delinquent property taxes can result, however, when economic difficulties rear their ugly heads. Should a property owner stop paying their property taxes, what happens next?

Counties in each of the United States are able to apply a property lien if property taxes are delinquent, according to state statutes. Property taxes are superior over other liens, and granted first lien status, under most state laws. It doesn’t matter if the mortgage was recorded after or before the tax lien, the lien is superior to even the mortgage.

A tax sale will be initiated by the taxing authority if, for a sufficiently long time, property taxes are delinquent.

Can You Save Your Home?

Is the tax sale of a property preventable? There are a couple of things you can do in addition to paying off your delinquent taxes in full. Here are some suggestions:

  • Seek a compromise, deferral, or abatement. Abatements and exemptions are available in every state. These will, for at least a portion of the tax liability, reduce the amount for some taxpayers. Reasons for reduction can be special personal status, income level, disability, the taxpayer’s age, etc. If a financial hardship has been faced, and the taxpayer can prove it, some states will defer property taxes. Once the taxes are delinquent, however, a deferral might not be possible.
  • File an objection to the assessments. Local and state laws provide a way for homeowners to reduce the tax liability and challenge the amount of a tax assessment. You can contest an assessment on two grounds for the most part. One way is to say that, compared to other properties in the area, the assessment was higher and, therefore, disproportionate. The other way is to claim that the property was inappropriately or inaccurately assessed. The taxpayer is asserting that the property’s taxable value is far less than the assessment.

Can You Get Your Property Back?

You might be able to redeem your property even once the tax sale has occurred. If you can pay the entire sale price, it is your right to claim the property, as the property owner. You will also likely be required to pay interest and certain additional costs. All of this must be done with in the statute-allowed time. Subject to redemption by the former owner, the purchaser generally acquires its interest in the property at the tax sale. If, within the prescribed time period, the taxpayer does not redeem, a clear property title goes to the purchaser.

If the home has an outstanding mortgage, ordinarily, the property won’t go to tax sale. Many mortgages have a clause that lets the lender add, to the total debt that the borrower owes the lender, advanced amounts.

All of this is very confusing, and that is why many individuals that fall behind in their property tax payments seek the assistance of a professional.

Have you fallen way behind on your property taxes? Do you need the help of an attorney? Tax Defense Partners are here to assist you. Contact us today to see what can be done about your delinquent property taxes.