Tax Liens and Deeds of Property

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When a property owner is unable to pay their property taxes, and after a formal collection letter is issued, a tax lien can be placed on that property.  If those taxes remain unpaid, and after a specified period, many states allow that property to be put up for sale at auction to pay those delinquent taxes.  These sales are based on what the delinquent taxpayer owes, plus interest and expenses, so the purchaser may be able to buy a home at a much lower rate than the market value of the day.  Once that property is sold, the purchaser is issued a tax deed to show sole ownership of the property to the purchaser.

Tax Lien

The first step for a government tax collection agency when property taxes are unpaid is to send an official collection letter to the property owner.  If the taxes are not paid within ten days of that letter, the tax agency has the right to place a tax lien on that property.  That means that if that property is sold, they have a right to a portion of those proceeds, if any remain when their priority status is reached.  If this tax debt is not satisfied in the sale of a home, the tax lien remains on the property and becomes the liability of the new owner.  If the property is not sold, the tax authority will continue to send collection and warning notices to the property owner.  If they do not respond, the property can be sold to satisfy the tax debt.

Tax Deed Sale

When a taxpayer’s taxes are substantially delinquent, and after a tax lien has been placed on the property, some states allow the property to be sold to pay off those taxes.  The owner and all those who have any interest in the property, must be notified that the property is to be sold at a public auction.  The minimum bid is set to cover the amount of the tax debt, the interest owed, and the expenses involved in selling the property.  The property goes to the highest bidder, at which time the purchaser is granted a tax deed for the property and sole ownership.  If the property does not sell at auction, it reverts to the county to which the taxes are owed.   
If you are facing financial difficulties and falling behind on your taxes, the loss of your home may be the next threat to consider.  However, there are alternatives.  A tax lawyer or a real estate lawyer can provide the counsel you need.  You may be able to work out a payment plan for your taxes.  A real estate lawyer may be able to recommend other options than foreclosure, as well.  Don’t go through this struggle alone.  Contact an experienced attorney to provide the advice and assistance you need.

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