When the county tax collector doesn’t receive the property tax payments for a house, state or county laws and rules dictate what happens next. In some counties, the house is sold at a tax lien or foreclosure auction to recover the unpaid taxes. Investors and home buyers bid at the public auction and the highest bidder takes ownership of the house.
Tax Lien Auctions
Contact the county tax collector or treasurer for information about the tax lien auctions, which are held once a year or every few years depending on the size of the county. Notice of an auction is published in the legal section of the local newspaper for three or four weeks before the auction. Information about an auction is often available on the county tax collector’s website.
Houses to Auction
Usually, property taxes must remain unpaid for several years before a house faces auction. The minimum bid at an auction is the total of the unpaid taxes plus interest and foreclosure expenses. Frequently, the market value of the house is greater than the minimum bid at the auction. Owners often redeem the house by paying all taxes and fees prior to the auction. It is more common for vacant property rather than land with houses to sell at a tax lien auction.
Preparation for the Auction
Most houses sold at tax lien auctions are sold “as is,” and no warranties are available. It is important to thoroughly research the house and land prior to placing a bid. Contact the county recorder’s office to find any liens or encumbrances attached to the property. The county assessor’s office provides copies of the parcel maps. Find the zoning for the property and determine the permitted uses.
Look at the Property
Often an inspection is not possible prior to a tax lien auction, but conduct an on-site visit, if possible. Try to observe as many details as possible without trespassing on the property. Note the topography, such as undesirable hills, ravines and swamps, or the presence of electric transmission lines. Sometimes owners allow the property to sell at a tax lien auction when the property has serious problems and limited uses.
Bid at the Auction
Carefully read the tax lien auction rules. Some auctions require buyers to bid in person, while other auctions are conducted online. Many counties require buyers to register before the auction and some require a refundable deposit. The highest bidder typically must pay in full with cash, a money order or a cashier’s check immediately after the auction. Even after the auction, the previous property owners may still have the right to redeem the property.
Kim Dieter has taught agriscience classes, developed curriculum and participated in the school accreditation process at the secondary and community college levels since 1980. She holds a Master of Science degree from the University of California, Davis, in animal science.