Property taxes are charged and collected by local governments to fund public services such as schools, police and fire protection and roadways. State law in Nebraska allows each county government to sell tax lien certificates for the purpose of collecting delinquent property tax payments. The procedure of sale of these certificates and how the certificates work is governed by the state law.
Tax Certificate Sales
The treasurer of each county is required to publish a list of properties that have delinquent property taxes and are subject to a tax lien certificate sale. This publication is made between four and six weeks prior to the sale date, which is the first Monday of March of each year. The sale is done by competitive bidding at public auction. The winning bid acquires a tax lien certificate on the property. The certificate is not a deed to the property, just an official document of holding a legal lien against the property.
Redemption Period Regulations
The owner of the property has the right to redeem it by paying the amount of back taxes plus 14 percent annual interest to the certificate holder, thus removing the lien. This right of redemption is good for three years from the date the certificate is sold. Until this full three-year period expires, the certificate buyer has no legal rights to or interest in the property other than the lien. This means the certificate buyer cannot enter, possess, use or obligate the property in any way during this period.
Certificate to Deed
The certificate buyer is entitled by the law to acquire full legal ownership of the property after the three-year period of redemption ends. To do so, however, the certificate holder must have paid any unpaid taxes or assessments that became due during the redemption period. The law also requires that the certificate owner must take action to acquire ownership within six months of the end of the redemption period. Otherwise he will lose any interest or claim on the property. The certificate holder can acquire ownership by getting a tax deed on the property from the county treasurer or by a foreclosure action.
The redemption period for property owners who are minors ends two years after they become adults. For property owners who are mentally retarded, the period ends five years after the certificate sale. Certificates for properties not sold during the annual auction can be purchased in the county treasurer's office during the rest of the year. Notices of taxes due after the certificate sale are not sent to certificate holders. They must inquire annually to obtain this information.
Kerry Zias has been a strategic business consultant and college instructor of business administration courses since 1990. He has taught courses and performed professional consulting work in the areas of marketing, management, business start-ups, entrepreneurship, real estate, sales psychology and performance, business communications, business law and political/governmental relations. Zias holds a Master of Business Administration in marketing from National University.