A home is sold at tax sale when there are unpaid property taxes. The process and timeline varies depending on what state you live in. If your property taxes are unpaid, it could take anywhere from 6 months to 3 years until your local authority can initiate a tax sale. When they initiate the tax sale process, the tax lien, or the home itself, are sold off in an auction type setting.

 

If you live in a state that does tax deed sale, your entire home can be sold at a tax sale if you do not pay taxes. If you live in a state that does tax lien sales,  the home is not sold, rather the lien itself is sold to the highest bidder at auction. That high bidder then tries to collect the money owed plus high interest. If they are unable to collect, they can then foreclose on the home.

Both a tax lien sale and a tax deed sale are auction type sales that are typically held at a local courthouse.  At a tax lien sale, when the highest bidder pays for the tax lien, the tax collector then uses that money to pay the taxes that are owed by the property owner.  In the case of a tax deed sale, the entire home is sold at auction to help recoup the tax money owed to the tax collector.  If you have a mortgage on your home, the mortgage company will often pay the taxes to prevent the home from going to tax sale. The mortgage company will add your taxes to the balance owed on your mortgage.  However, this means the mortgage company could then file foreclosure if you are unable to catch up on what is owed. If the mortgage company does not pay the taxes, the house can still go to tax sale in state where they do tax deed sale. Often there are two types of tax sales – One in which the property is auctioned off and the highest bidder is then responsible for paying the mortgage, back taxes and any other liens on the property.  The second type is more of a free and clear sale where the home is sold for what is owed on the back taxes, but the highest bidder is not responsible for what is owed on the mortgage.

Property owners are often given a period of time in which the county they live in will work with them to get caught up on property tax payments. This period of time varies by state. The best thing a homeowner can do is contact their local tax office to see if there are any type of programs to help with catching up on back property taxes. Often times there will be programs for catching up in place for seniors, or people going through some type of hardship.  Your local tax office may be able to set you up on a payment plan to catch up which will help delay the tax sale process.  Some local tax authorities also have a tax appeal period during which time you could work with an attorney or real estate agent to get your taxes lowered based on the current value of your home. This is usually only done at certain times of the year, but is worth pursuing to prevent falling behind on taxes again in the future.

If your home is sold at tax sale, you may be able to get it back afterwards as well.

Most states have what is called a redemption period. Sometimes this is before the sale, sometimes it is after the sale. During this period of time you can get the home back by paying the purchaser of the home what they paid for it OR by paying the back taxes plus any interest or fees that may be due.  In any case, if you are trying to get your home back before the redemption period or during it, It is always best to consult a real estate attorney in your area to find out what your options are if you could not work out a payment plan with your local government beforehand. The tax sale process can be complicated and you want to fully understand your rights as a homeowner and the process involved.