The process is more complicated than a traditional sale, and requires that you as the seller address the delinquent taxes before the sale can close — either by paying off the owed taxes beforehand, or using the proceeds of the sale to fulfill the debt requirements. However, if the sale doesn’t cover both your mortgage and the owed taxes, things can get more complicated. If someone bought the tax lien at the tax sale, the tax lien need to be redeemed before you can sell your house. What if you don't have means to redeem and you still need to do it quickly, so you don't loose your rights for the property? Don't worry there are still ways to do it by selling to an investor like Easy Outs Homes. -->Get your Cash Offer Today!
Here are some explanation of the process and Frequently Asked Questions:
Why is my property going into tax sale?
You have unpaid taxes, water and sewer bills or other municipal liens on your property.
At the Tax Sale, does the bidder buy my property? Do I have to move after the sale?
A tax sale bidder does not purchase your property. They purchase a lien on the property, like a mortgage, that is created by the unpaid taxes, water and sewer charges or other municipal debt. If you redeem the property at any time prior to foreclosure, you will not have to give up your rights to
the property.
What can I do to keep my property from being in the Tax Sale?
To keep your property from being in your county's tax sale, you need to pay the amount due the County or Baltimore City prior to the tax sale. After a scheduled date in the Final Bill and Legal Notice, the payment must be in certified funds.
Depending on the County, if you make a partial payment that reduces your bill to below a certain amount, they may remove your property from the tax sale. If you make this partial payment, it is important to confirm with the County that your property will be removed from the tax sale. Of course, you'll still have to pay the remaining amount eventually, as well as plan to pay the next year's taxes when they are due. The State Tax Sale Ombudsman's Office can help you find out the threshold amount for your
county, and can connect you with resources that may help you to create a financial plan.
Most counties will not enter into a payment plan to keep a property out of tax sale. However, some counties will. So it's important to find out about your county's policy and any application process and deadlines, and take the necessary steps as soon as possible. The State Tax Sale Ombudsman's
Office may be able to help you learn about and apply for these programs.
The longer you wait to pay your bill, the higher the bill becomes with fees and interest charges. If the lien is sold at the Tax Sale, these fees and interest will increase until the lien purchaser forecloses on the
property--taking possession of the home--OR until you redeem the property by paying off the amount due.
How long does the owner have to redeem the property after the Tax Sale?
You may redeem the property at any time until your right to redeem has been foreclosed by a legal decree.
This means that you can pay off the debt to the County or Baltimore City and clear the lien on the property after the tax sale, but it must be before the lien purchaser receives a legal judgment that forecloses your right to redeem your property. Once the purchaser does this, it is too late to redeem and the purchaser may take title to the property.
What must the homeowner do to redeem the property after a Tax Sale?
To redeem the property after a tax sale, the homeowner must pay to the County or Baltimore City the total amount paid at the tax sale on his or her behalf, together with interest and penalties and any taxes that accrue after the tax sale date. This payment must be made with certified funds.
If the redemption occurs after four months from the date of tax sale, the homeowner must also reimburse the holder of the certificate of sale for expenses and attorney's fees incurred, in addition to paying the County the funds previously described. But if the homeowner redeems within the first
four months from the tax sale date, he or she is not liable for bidder expenses.
What if the homeowner does not redeem the property?
If a homeowner does not redeem the property after the tax sale, the lien purchaser may file a civil action case in court to foreclose the owner's right of redemption. The action to foreclose the owner's right of
redemption cannot be filed until six months after the date of sale (nine months in Baltimore City), and it cannot be filed later than two years after the date of the certificate. If the bidder files within the allowed time frame, and a judgment is granted in favor of the bidder, the bidder may gain full title to the property by paying the balance of their bid, and any taxes that accrue after the date of sale, after which a deed can be drawn.
What will happen if a bidder does not file a civil action case within two years?
If the homeowner does not redeem, and no civil action case is filed by the bidder within two years from the date of the certificate of sale, the certificate of sale is void and the bidder loses all rights to the property and to any monetary reimbursement. The lien may be sold again at the following tax sale.
Does the County initiate or handle any foreclosure proceedings?
No. The counties and Baltimore City do not provide legal counsel or assistance to either party in a civil action case. Interested parties should seek professional advice as deemed necessary. The State Tax Sale Ombudsman's Office can refer homeowners to legal resources that may be able to help.
If you have additional questions, please don't hesitate to contact the State Tax Sale Ombudsman's Office at (833) 732-8411 or at sdat.taxsale@maryland.gov.
YOUR PROPERTY TAXES
Each County and Baltimore City maintains the tax accounts for real property located in its jurisdiction. If you do not receive your property tax bill in July, contact your County’s “Collector of Tax,” usually the treasury or finance office. Contact information for each office is provided under the LOCAL TAX COLLECTORS link.
Be sure to notify your County or Baltimore City of any address changes by completing this change of address form https://dat.maryland.gov/SDAT%20Forms/addresschange.pdf and submitting it to the local tax assessment office listed under the form.
If your property taxes are put in escrow by your mortgage company and you receive a tax bill, contact your mortgage company. Also, check your escrow analysis statement to verify that your taxes have been paid by your mortgage company.
The State Department of Assessments and Taxation (SDAT) determines the taxable assessment of your real property. Property assessments may be appealed. For more information on the assessment process, visit https://dat.maryland.gov/realproperty/Pages/Assessment-Appeal-Process.aspx.PROPERTY
TAX DUE DATES
Your property taxes are due without interest as of July 1 of each year. The taxes are overdue on the following October 1, and interest accrues after that date.
Owners of properties designated as “principal residence” may pay real property taxes in two semi-annual installments. The first installment is due by September 30 of each tax year, and the second installment (including applicable service charge) is due by December 31 of each tax year.
THE TAX SALE PROCESS
Any unpaid property taxes constitute a lien on the property from the date they are due until they are paid. A lien is a debt attached to your property, like a mortgage. County-specific local charges can be added to this lien. State law requires each County’s Collector of Taxes to sell these tax liens to collect delinquent taxes and other fees owed to the County. The tax liens are sold as “tax lien certificates” through what is called a “tax sale.”
The tax sale is the process where the tax lien certificates are sold at public auction to the highest bidder. Each County issues bidding rules for its sale. Once the lien certificate is sold, the County’s lien on the property passes to the purchaser.
Note: the unpaid debt and fees are sold at auction, not the real property itself. After the tax sale, the homeowner still owns the real property. The purchaser buys the debt owed and a right to foreclose on the property if the homeowner fails to pay off the debt within a limited time. After a tax sale, the homeowner can still “redeem” the property by paying off the debt owed in the lien certificate. But time is of the essence. More on redemption by the owners, below.
NOTICE OF SALE
Thirty days or more prior to the date property is first advertised for tax sale in a newspaper, the Collector is required to mail a statement to the person who last appears as owner on the Collector’s tax rolls. This tax sale notice contains the person’s name, the amount of taxes due and a statement that if the taxes are not paid, the property must be sold.
When the thirty-day period expires, the Collector of Taxes must publish a listing of the properties once a week for four successive weeks in one or more newspapers, published in the County, notifying the owners that the property is to be sold at public auction. Advertisement will contain the date, time and place of the sale, as well as a description of the property, name of person who last appears on the Collector’s tax roll as the owner, the assessed value of the property as determined by the last assessment and the tax sale amount.
THE CERTIFICATE OF SALE
Within about six months after the tax sale, the Collector gives the purchaser a certificate of sale. The certificate states that the tax lien certificate was sold by the Collector to the purchaser, the date of sale, the amount bid, the advertised amount, and the annual interest rate payable upon redemption. The certificate is void after two years from the date of the certificate of sale unless the purchaser files a proceeding to foreclose the homeowner’s right of redemption. REDEMPTION BY OWNERS
The homeowner has the right to redeem the property at any time until the right of redemption is finally foreclosed by an order of the court.
The homeowner can prevent the purchaser from obtaining ownership by “redeeming” the property. Prior to action by the purchaser to foreclosure, the owner may redeem the property by paying to the Collector of Taxes the amount required for redemption. The purchaser or holder of a certificate of sale is not entitled to be reimbursed for expenses incurred within four months after the date of sale. After four months, these additional fees may be included in the redemption amount. The longer the homeowner waits to redeem the property, the more expensive the redemption amount becomes.
If the redemption rights are exercised after an action to foreclose and there is any dispute, the person redeeming may apply to the court to fix the amount necessary for redemption. Also, in case of a dispute regarding redemption, the Collector cannot accept money or redemption unless and until a certified copy of the order of the court fixing the amount necessary to redeem is filed with the Collector.
The person redeeming is required to pay to the Collector, the total amount of money necessary to redeem plus interest and subsequent taxes with related interest and penalties to the date of redemption.
During the period of redemption, the owner of the property has the right to continue in possession of and to exercise all rights to ownership until such time as the right of redemption is foreclosed.
ACTIONS TO FORECLOSE
Six months after the tax sale (nine months for owner-occupied residences in Baltimore City), the purchaser may file a complaint in Circuit Court to foreclose all rights of the homeowner to redeem the property, provided that all notice requirements have been met. If a foreclosure action is not taken by the purchaser within two years after the sale, the certificate of sale is null and void, and the purchaser loses the right to foreclose. The longer the homeowner takes to pay off the tax lien certificate, the higher the risk of foreclosure.
The Foreclosure Process
The complaint to foreclose rights of redemption must set forth: (a) the fact of issuance of the certificate, (b) a description of the property, (c) a statement that the property has not been redeemed, (d) a request for process directed to the defendants named in the complaint; (e) a request for an order of publication directed to all interested parties, (f) a request that the court pass a final judgment foreclosing all rights of redemption of the defendants and to the property and (g) a statement of the amount necessary to redeem. The certificate of sale must be attached and made a part of the complaint.
The plaintiff in the proceeding to foreclose the right of redemption must be the holder of the certificate of sale. The defendants in the proceedings must be: (a) record title holder(s) of the property, (b) owner of the leasehold to such property, if applicable, (c) mortgage holders, (d) the trustee under any deed of trust recorded against the property, (e) the County or (f) the State of Maryland, if appropriate.
Upon the filing of the complaint, the court will issue a summons for all defendant parties named in the complaint. At the same time the summons is issued, the court will issue an order of publication directed to all defendants.
At the expiration of the time limit set in the order of publication and summons, the court shall pass its judgment in the proceedings. The judgment is final and conclusive upon the defendants. If the court finds for the plaintiff, the judgment shall vest in the plaintiff an absolute and indefeasible title in fee simple. If the property sold was subject to ground rent, the judgment shall vest a leasehold interest in the plaintiff.
The judgment of the court will direct the Collector to execute a deed in fee simple or in leasehold, as the case may be, upon payment to the Collector by the certificate holder of the balance of the purchase price, together with all taxes, interest, penalty and charges accruing subsequent to the sale. The deed is to be prepared by the holder of the certificate of sale or his/her attorney. The Collector is not obligated to execute the deed until the Clerk of the Court has furnished a collector with a certified copy of the judgment. If the holder of the certificate does not comply with the terms of the final judgment within 90 days, the judgment may be stricken by the court upon the motion of an interested party.
Once a judgment is granted, the plaintiff becomes liable for the payment of all taxes due after the judgment and for any surplus bid, interest and penalties on the taxes.
Any person acquiring title to property under and pursuant to the terms and provisions of this subtitle shall be entitled to issuance of a writ of possession of the property.
No information on our website is intended to constitute legal advice and should not be relied upon in determining your rights and liabilities under governing law. You should either consult the State law or obtain independent legal advice on your rights and responsibilities under the law.
Can You Sell a House With Property Taxes Owed?
If you want to sell a house with property taxes owed, you can either pay back the tax before the sale or sell and use the home sale to pay the debt.
Pay Back the Taxes Quickly
If you have the funds in your savings or can liquidate the funds needed to pay the owed tax and have the lien removed, you should do so. The longer you wait to pay back the tax, the more interest it accrues, putting you in further debt. Once you’ve paid back the owed taxes, you can ask to have the lien removed from your home’s title.
The sooner you can pay back the taxes owed on your property, the better off you will be. If you can’t settle the debt before you sell a house with property taxes owed, you may still be able to go forward with a sale and move on from your home debt-free.
How to Sell a House With Property Taxes Owed
If you need to sell your home to pay back property taxes owed you may be able to use the home sale to fulfill your debt obligations. Otherwise you may need to obtain a lien release or find the ideal buyer for your home: a real estate investor.
Pay Owed Taxes Using Home Sale Proceeds
The most common way to sell a house with property taxes owed is to pay back the taxes using the proceeds of the home sale. At the time of closing, the sale of the home will go toward the mortgage and then the lien. A closing attorney will supervise the transfer of funds to ensure that the delinquent taxes are paid in full. Any remaining balance, after closing costs and Realtors’ fees will go to the seller.
For example, if you sell your home for $200,000, a large portion of that will go towards the mortgage balance of $150,000. If you have a tax lien of $15,000 on your home, your closing attorney can arrange to have that amount taken out of your sale proceeds at closing, which will leave you with $35,000 (before closing costs and fees).
If the proceeds of your sale do not cover the mortgage and owed taxes, you’ll be responsible for bringing the rest of the owed balance to closing to satisfy the lien — or the sale cannot close. If you aren’t sure that you can sell your home for a price to meet all financial obligations, you may want to seek another route before you sell a house with property taxes owed.
Obtain a Lien Release to Pay After Closing
In some situations, the taxing agency may grant a lien release called a “certificate of discharge”. This certificate does not forgive the debt or extend your repayment indefinitely. What it can do is allow the lien to be released from the title of the property and transferred to you. You must still repay the owed taxes, but you’ll be able to sell your house and pay back the debt after the sale.
The disadvantage of this method is that it can take time, extending the closing of the sale and increasing the chance the buyer walks away.
Most average home buyers will not be interested in a home with a lien and back taxes owed. They don’t want to be responsible for paying extra taxes, and the closing process can take a long time if they have to wait for you to obtain a lien release for the sale to go through. If you want to find a buyer to sell a house with property taxes owed, you need to find the ideal buyer for your situation: a real estate investor.
Sell to a Real Estate Investor---> Get my Cash Offer Today!
The best way to sell a house with property taxes owed is to sell to a real estate investor. A real estate investor has the time and capital to help you out of a tough situation, and won’t run for the hills if they see a lien on your title. They have the expertise in real estate to give you sound advice and can help you find the best solution for your situation.
When you sell your home to a real estate investor, you can complete the sale on your timeline. You also won’t have to worry about making any costly repairs or changes to your home, hiring a Realtor, or waiting around while they secure financing. Many real estate investors prefer to close on home sales quickly, with fast cash offers, so you can resolve your debt and close on your home sale quickly and without the hassle of a traditional sale.
If you owe taxes, but still want to sell your home, you have options. Whether you can pay back the taxes you owe before selling your home, or use the home sale to pay back your debt, there’s a way to navigate this situation that will resolve your financial problems and help you move forward in a new home.
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