Property taxes are crucial to any local government operation. They fund county and municipal services such as public schools, fire and police departments, and utilities. Because property taxes are a huge part of their budget, local governments do not look kindly on delinquent homeowners. If you do not pay your taxes on time, they could sell your home.
Some mortgage lenders include property taxes in the monthly mortgage payment, so you don’t have to worry about them. In cases where taxes are not collected by the lender, it is the responsibility of the homeowner to pay them directly.
What can happen if you don’t pay taxes?
Tax authorities have incredible collecting power, and there are many ways they can force you to pay your real estate tax.
- Interest and penalties
If you miss a tax payment, your local taxing authority will start charging interest that could accumulate monthly. It is also possible to incur monetary penalties until you are able to pay your balance. Some local governments even publish a list of delinquent taxpayers in the local paper.
- Tax lien
If you think you can simply sell your home and walk away from your unpaid taxes, forget about it. When the taxing authority places a tax lien on your property, a potential buyer won’t be able to get a clear title to your home. You have to settle your outstanding tax bill before the lien can be lifted.
- Tax sale
The next step a taxing authority will take is to schedule your home for a tax sale. This is similar to a foreclosure. There are two types of tax sales:
- Tax deed sales
- Tax lien certificate sales
In a tax deed sale, the taxing authority can sell your home outright and award the deed to the highest bidder.
In a tax lien certificate sale, the taxing authority sells the tax lien to a buyer who receives the right to collect the tax due plus penalties and interest. The buyer can choose to foreclose the property or convert the certificate to a deed if the homeowner continues not to pay.
In most cases, the mortgage lender opts to buy the tax lien rather than allow it to go to another buyer. If your home is sold to a third party, the mortgage is wiped out. This way the mortgage lender can simply add the taxes to your mortgage payments or foreclose the property.
Contact a Real Estate Attorney for Further Inquiries
If you are having money troubles and have fallen far behind on your property tax, speak with a real estate attorney as soon as possible. There are a few options you can try such as abatement request, installment payment plan, loans, or grants to help you reduce your tax bill.
Written by The VanMatre Law Firm, one of the top real estate attorneys in Columbia, MO.