Property taxes are usually paid from an escrow account when you recieve a mortgage from your lender. This means that the borrower will pay additional funds into an escrow account to combine their interest, principal and tax payments into one monthly payment. In other cases, homeowners go the route of paying their property taxes seperate. Instead of combining these payments together, they will either pay one lump sum payment or break it down into 3-4 yearly payments. As we all know, we can go through some financial trouble at any point, so some homeowners will decide not pay make their tax payments.
What happens to homeowners when property taxes are unpaid?
All counties within the United States have the authority to place a lien on a property if their taxes are delinquent. Each state has a different amount of time that is required for them to move forward with the lien and begin the foreclosure process. In the state of NY, 3 years of unpaid taxes will result in the county foreclosing on your property. So once the property has been delinquent for more than 3 years, the county will issue a tax sale on the home. Counties usually hold a tax sale once a year and it usually comes later in the year. In NY the taxpayer will recieve a tax deficient notification, notifying them that if there is no settlement made between the homeowner and the county, the county has the right to move forward with a tax auction. In the state of NY, once your home is sent to the tax auction. It usually will be sold to the highest bidder
Dont think because you can not pay off your tax bill in full, that you have no other options when it comes holding off the county from foreclosing on your home. Here are a couple ways to avoid this process:
Seek a defferal or compromise: Each state has some kind of abatement or compromise to relieve some of the property taxes that are due. For example, tax liability may be reduced due to a taxpayer’s age, disability, income level, or personal status. If for some reason you have faced financial hardship in the last year or so, you may be able to get a deferral for this reason. You may also be able to negotiate with your county to help give you some more time to pay your taxes or lower your payment, so you can become non delinquent
Payment Plan: As with any foreclosure if you know that you are not going to make your tax payments, the sooner you contact your tax office the better. You will be able to set up some type of payment plan with your county. The payment plan will most likely be a 25% down payment on the taxes owed and then make monthly payments for the rest of the year to pay off the delinquent taxes. This will allow you to stay in your home and not have to be foreclosed on.
Object to the assessments: State and local law will provide a procedure for a homeowner to challenge the amount of a tax assessment and reduce the tax liability. There are mainly two grounds to contest an assessment. First, the taxpayer can assert that the assessment exceeds the property’s taxable value, meaning its value has been assessed incorrectly. Second, the taxpayer can argue that the property has been disproportionately assessed, meaning that the assessment is higher than assessments of comparable properties in the area. Once the assessment has been reduced, the homeowner may have an easier time paying off the property tax debt.
Conclusion:
If you find that you may not be able to pay this years taxes, I would advise you to contact your local county office as soon as possible. If you need to seek advice or counsel, I would contact a local lawyer in your area who has dealt with tax situations like this in the past. He will advise you what the best route will be to take and get you and your family into a better situation. If you are interested in selling your property before your home goes into foreclosure, please fill out this form.