What Happens if You Are Behind on Property Taxes?

property taxes, tax lien concept

Paying your property taxes is one of several financial responsibilities of homeownership. Property taxes must be paid each year, regardless of whether you still owe on your mortgage loan or if the house is fully paid off. Bad things can happen if you fall behind on your property taxes. The good news is you may have options to avoid your house being sold in a tax lien sale.

Property Tax Laws & Liens

Property tax laws and property seizure procedures can vary from state to state and from county to county. We are going to use California as our main example, as this state has some of the most expensive property taxes and strictest laws in the country. Others may be more lenient. Some locations may give you less time before they try to seize your property. It’s important to do your research, talk with your tax advisor or attorney and understand your tax liabilities.

How Long Do I Have to Pay Past Property Taxes?

In California, you have to be at least five (5) years behind on your property taxes before they start the tax sale process. This means you have ample time to get reasonably caught up on your payments before any attempts can be made to seize and sell your house.

If you are past that 5-year threshold, you could be facing a tax lien sale at any time. First, the tax collector must contact you with a clear notice about the tax sale. This must happen within 45-120 prior to the property being sold at auction. They will send the notice to your last known mailing address and must also publish the information publicly in a local newspaper or other approved media source. If the property is your primary residence, the tax collector must make a reasonable attempt to contact you personally within 10-120 days of the sale.

In most cases, notices will be sent and contacts will be made closer to the 120-day time frame, which will give you about four months to make up for your past payments or figure out other legal solutions. However, there is a chance you may not find out until closer to the sale date and, by then, you may have very limited options to prevent the lien.

What Are My Options?

The best option is to try and avoid a tax default lien altogether. Remember you have five years before the tax collector can take action and seize your property. That is quite a long time to fall behind on property tax payments. If you are already a couple years behind and aren’t sure if you will be able to catch up before its too late, you should take preemptive action to sell your property while you still can.

You can list with a real estate agent or work out a cash home sale with a real estate investor. This will allow you to sell your house and get whatever money you can get out of it. That can be used to pay off property tax debts, mortgage loans or other debts that have gotten you behind financially. You may end up losing a little or breaking even by the time all is said and done, but this is still better than waiting for the inevitable and losing your property completely (with nothing to show for it but a damaged credit score and a negative mark on your tax records).

Don’t wait for a tax lien or mortgage foreclosure to happen. Take action while you can and explore your home selling/financing options. You may be able to avoid losing your house or at least minimize your financial problems. Contact PropertyLark to get a fair cash offer within 24 hours. We can also help you look into other selling or creative seller financing options to figure out the best solution(s) for your particular situation. Fill out the contact form to the right to get started.