Unpaid property taxes could jeopardize ownership of your property


United States: Unpaid property taxes could jeopardize the ownership of your property

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If a homeowner does not pay their taxes on time, then the unpaid balance (taxes and penalties) may be subject to sale to a third party in an annual tax sale. If the taxes have been sold, the owner of the property has a period under the law of a particular state (refund period) to reimburse the taxes. If the property taxes sold are not reimbursed in a timely manner, the owner can lose legal title to the property to a third party buyer through a forfeiture process.

Before property taxes are sold in the tax sale, the county treasurer usually sends a certified notice to the taxpayer warning them to pay their taxes and penalties or risk a loss. If taxes and penalties are not paid in full by the scheduled sale date, the unpaid taxes may be sold to a tax buyer.

If the owner’s taxes were sold in a tax sale, the owner can correct the deficit by paying the unpaid taxes, as well as any additional interest and charges. This is called a “tax refund”. The landlord can usually contact the county clerk’s office and order a “buyout cost estimate”. The buyout cost estimate is a calculation of the amount that must be paid in order to buy back the tax sale and eliminate the threat of loss of the property. If the owner does not pay all original taxes and all interest, penalties and charges during the redemption period, the tax buyer can acquire legal title to the property from the owner at the end of the redemption period. The acquisition of legal title by this procedure is called a “tax act”.

Failure to pay property taxes on time can result in loss of property. Careful management of the payment of property tax is necessary.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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