If you don’t pay your property taxes or other municipal charges, like a sewer or water bill, the past-due amount becomes a lien on your home. Property tax liens almost always have priority over other liens, including mortgages. All states have laws that allow the local government to sell your home through the tax lien process to collect the delinquent taxes.
Generally, homeowners who lose their property in a tax sale may “redeem” (reclaim) the home by:
- paying the buyer the amount paid at the sale, plus allowable costs and interest, or
- paying the delinquent taxes, plus interest.
The length of the redemption period after a sale varies from state to state. In some states, the homeowner’s right to redeem happens before the sale.
Besides redeeming, another option for reclaiming the property is to ask a court to set aside (invalidate) a tax sale. Courts sometimes set aside sales in cases where, for example, a mistake happened either in the sale process or in the imposition of the tax.
How Property Tax Sales Work
Each state has different laws and procedures for tax sales. Most of the time, the taxing authority, usually the county, doesn’t have to go to court before holding a tax sale. Instead, the process often starts when the taxing authority files a list of delinquent taxes, including information about the taxpayer, the property, and the amount due, with the recorder’s office and publishes a copy in the newspaper. The homeowner typically receives personal notice of the pending tax sale.
Tax Deed Sales
In some places, the tax sale is a public auction. Bidding usually begins at an amount that covers the delinquent taxes, interest, and related penalties owed to the taxing authority. The winning bidder at the sale receives either a tax deed or tax lien certificate. In tax deed sales, the taxing authority sells full ownership and possession rights to the home. The purchaser at the sale gets title to the property.
Tax Lien Sales
A tax lien certificate sale, on the other hand, doesn’t convey ownership of the property. Instead, the taxing authority sells its lien, and the purchaser receives a tax lien certificate. The purchaser then basically takes over the taxing authority’s position and may collect full payment of the past-due taxes, plus interest, from the delinquent taxpayer. If the sale price or delinquent taxes aren’t paid by a specific date, the lien purchaser generally has a right to foreclose the lien or take certain steps to convert the certificate to a deed and take title to the home.
Other Procedures
In some jurisdictions, however, a sale isn’t held. The taxing authority executes its lien by taking title to the home. State law then generally provides a procedure for the taxing authority to dispose of the property, usually by selling it. In other jurisdictions, the taxing authority uses a foreclosure process to sell the home.
How to Get Your Home Back After a Tax Deed Sale
You might be able to reclaim your home after a tax deed sale by redeeming it or asking a court to set the sale aside.
Redeeming the Property After a Tax Sale
Most jurisdictions that sell tax deeds offer a right of redemption after the sale, which allows you to get your home back after the tax sale. To redeem, you must reimburse the purchaser the amount paid at the sale (or pay the taxes owed), plus interest within a specific time frame—called a “redemption period”—which is generally between one to three years. If you can, you should redeem as soon as possible to prevent additional interest and penalties from accruing.
Usually, you get the right to live in the home during the redemption period. But if you don’t redeem, the purchaser gets ownership of the property free and clear of any liens that existed before the sale. To find out the tax sale redemption period where you live, review your state laws or talk to a lawyer.
Sometimes, the redemption period takes place before the sale. If you pay the delinquent taxes before the sale, the sale won’t occur.
Setting the Sale Aside
If you can’t redeem the home, you might be able to set aside (invalidate) a tax sale by showing, for example:
- errors in the tax lien or tax sale process
- you paid the taxes, or they’re not owed, or
- a good reason why you neglected to pay the past-due amounts.
Errors In the Tax Sale Process
Mistakes in the tax sale process could provide a basis to set a sale aside. Because property tax liens and sale processes are statutorily created, courts have typically held that all legal requirements must be substantially followed to have a valid sale. So, omitting the name of one of the property’s owners or failing to give proper notice might provide grounds to void a sale. Minor defects in the process, however, probably aren’t sufficient to invalidate a sale.
Whether a particular defect is significant enough to invalidate the sale depends on a state's statutes, case law, and the particulars of the situation. For instance, say you give the county (the taxing authority) a new mailing address. But the county fails to send you notice about the overdue taxes to your new address. Because you didn’t get notice of the tax sale, you could ask a court to set the sale aside for lack of proper notice.
What If You Paid the Taxes or Taxes Weren’t Owed?
If you already paid the taxes, a sale would be invalid and could be set aside. Likewise, if the property is exempt from taxation, a tax sale could be voided.
Excusable Neglect
If you have a legitimate reason for not responding to a tax sale, like a tax foreclosure action, you might be able to set aside the sale. For example, if your 85-year-old mother with memory issues doesn’t pay the delinquent taxes, a court could set aside a tax sale and let her keep the home if she gets current on the taxes. Or she might qualify for an abatement or deferral.
How to Get Your Home Back After a Tax Lien Sale
After a tax lien sale, you still own the home because the purchaser only buys a lien against your property. If you pay off the amount of the lien or the purchase price (depending on state law), plus other allowed amounts, like interest, within a certain time period, you get to keep the home. This process is also referred to as “redeeming” the home.
Talk to a Lawyer About Tax Sales
If you’ve lost your home to a tax sale and want to learn more about setting the sale aside or redeeming the property, consider talking to a real estate attorney, tax lawyer, or foreclosure attorney. A qualified attorney can answer your questions about how the tax process works where you live and the specific steps you need to take to save your home.