October 12, 2017

How not Paying your Property Taxes can Result in Losing your House

In a recent article in the News Gazette, John Roska explains the process of losing your house due to negligent property tax payments.

“It’ll take a while. And you’ll get notice and several chances to stop it. But because the amount you much must pay to save your house keeps increasing as time passes, the sooner you pay the better,” said Roska.

This article offers a clear-cut explanation of the process we go through once we attend a county tax sale, place a lien on the property, and eventually claim ownership of said property. Take a minute to read the article below then reach out to us to discover what your role as an investor would be in this process.

John Roska: Not paying property taxes eventually loses house

Q: What happens if I don’t pay the property taxes on my house? Can I lose my house?

A: You can lose your house if you don’t pay your property taxes. It’ll take a while, and you’ll get notice and several chances to stop it. But because the amount you must pay to save your house keeps increasing as time passes, the sooner you pay, the better.

Unlike income taxes, property taxes are based the value of a real, physical asset. To keep the tax collector happy, that asset can be sold if the taxes aren’t paid.

The process starts if you don’t pay your tax bill in full by the annual September deadline. The county collector can then apply for a judgment against the property in the amount of the unpaid taxes. That judgment creates a lien on the property.

To get a judgment, the collector first publishes in a local paper a list of properties with unpaid taxes. In addition to that public notice, individual notice must also be mailed to each delinquent property owner. That’s your first post-delinquency chance to pay — and by far the least expensive.

After the collector has a judgment, they conduct a tax sale. The collector auctions off each delinquent property to the person who bids the amount of the unpaid taxes, and a penalty amount. The maximum penalty is 18 percent — but it’s charged every six months.

To minimize the amount that property owners must pay to keep their house, the person bidding the lowest penalty amount wins. Now, to “redeem” your property by paying what’s owed, you must pay the unpaid taxes, plus the penalty amount. Plus fees. Plus interest on top of all that.

The tax buyer whose bid wins usually doesn’t want the property. The tax buyer just wants all that extra money that you must pay, on top of the unpaid taxes, to redeem and save your house.

The tax buyer doesn’t immediately get your house. They only get a tax certificate, which proves they own the tax lien on your house. That certificate gives them the right to eventually seek a tax deed to your house, and the right to what you must pay to redeem the property by paying up.Property owners have 2 1 / 2 years from the tax sale to redeem. The tax buyer can extend the period of redemption beyond that 2 1 / 2 years.But if they don’t, shortly before that 2 1 / 2 years is up, they can file a petition in court for tax deed to your house. Before they file in court, they must send you notice that your right to redeem is about to expire. That’s your second post-delinquency chance to pay up.

If you don’t pay, the tax buyer petitions for a tax deed. Like any court case, you get served with summons. Although that doesn’t give you another chance to redeem, it does give you a chance to contest whether there’s been “strict compliance” with all the tax sale procedures.

But if you don’t pay, and the tax buyer did it right, they get a tax deed, and you lose the house.

John Roska is a lawyer with Land of Lincoln Legal Assistance Foundation. Send your questions to The Law Q&A, 302 N. First St., Champaign, IL 61820. Questions may be edited for space.


To learn more about tax liens, and the investment opportunity they provide click here.



About the author 

Charles Sells

Charles Sells is the founder and CEO of The PIP Group, a turnkey service provider that focuses on investments in distressed real estate assets including tax liens, tax deeds, traditional foreclosures, fix-and-flips and long-term cash flow acquisitions. He has been involved in tax lien investing for over 20 years, during which time The PIP Group has grown to become one of the largest agencies of its kind with nearly 1,000 individual and institutional investors worldwide.

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