The Basics of Property Taxes and Tax Liens.
January 1 of each year is significant for homeowners, investors, and purchasers alike. It’s the day property taxes come due. Whether you’re concerned about losing your home, or waiting to grab one at a tax sale, the Law Offices of Mark Weinstein, P.C. can help.
In the same way that you could lose your home if you don’t pay your mortgage (i.e., foreclosure), if you don’t pay your property taxes every year, you could end up homeless.
This is because here in Georgia, when your taxes come due, the county tax commissioner gets an automatic lien against your property to secure the payment of your property taxes. If you don’t pay, that lien attaches to your property.
What’s a lien, you ask?
A lien is a notice that attaches to real property. It puts the world on notice that you owe a creditor money. If you have a lien against your property, when you go to refinance or sell it, you won’t be able to do either. The lien will “cloud” title to the property. You need to have “clear title” in order to sell or refinance. To clear title to your property, you will need to resolve the lien. Generally this means you will need to pay what you owe.
Liens Lead to Foreclosure.
Once your property taxes become “past due,” if you continue to fail to pay them, the tax commissioner will start foreclosure proceedings. This means that the tax commissioner will foreclose on your home and it will be sold at public auction to pay what you owe in back taxes.
The tax commissioner can proceed by nonjudicial tax sale (which does not involve the courts and is generally faster and cheaper) or by judicial tax sale (which is a court proceeding and generally takes longer and is more expensive.)
Once the tax commissioner has “levied” upon your property (i.e., started the foreclosure proceedings), the additional levy costs and fees are added to the delinquent account—increasing what you owe. Only certified funds are accepted as payment and everything you owe must be paid in full. If you can’t pay, the property will proceed to tax sale.
Once a property is earmarked for tax sale, more costs are added to the delinquent account – for title research, advertising and other necessary actions. At this point, you still have the option to pay everything—all applicable taxes, costs and fees— with certified funds— to prevent your property from going to sale.
If you can’t pay the full amount, the property will be sold at auction to the highest bidder for the amount of unpaid taxes (plus fees and other costs) that you owe.
Foreclosure and the Right of Redemption.
But it’s not over yet.
The property may be sold, but that does not mean that the tax sale purchaser has free and clear title to your home. This is because in Georgia, the former owner of the property has 12 months after the tax sale to reimburse the purchaser for the amount the purchaser paid at the tax sale (in addition to other costs) to reclaim the home.
For a tax sale purchaser to gain clear title to your home, he must wait 12 months after the sale and then foreclose on your right of redemption. He does this by giving you written notice that your right will expire on a certain date. You can redeem your home up to the expiration date in that notice. Generally, this means you have about 30 days after the written notice to exercise your right to redeem.
And There’s More.
Tax liens and tax sales are very complicated cases. For example, what happens if the property sells for more than what is owed to the tax commissioner? Who gets the surplus funds? This is only one area where tax sales can get complicated or confusing. Whether you are a homeowner, investor, or purchaser at the tax sale, you can benefit from the advice and guidance of a seasoned tax sale attorney.
The attorneys at the Law Offices of Mark Weinstein, P.C. have helped hundreds of homeowners and investors alike navigate the complicated tax sale process. We have the expertise that can help you recover your home or obtain clear title to your investment.