At least once a year, house owners pay property tax to the local government. The fair market value of the house determines the tax payment. Property tax revenues help fund local government, including schools, law enforcement and community programs. Occasionally homeowners don’t pay the property tax bill. State and county rules and laws determine what happens next. Some states sell tax certificates to help collect the debt. A tax certificate is similar to a loan. An investor pays the property tax for the property owner and holds a tax certificate. The tax certificate is canceled when the property owner pays the delinquent property tax to the local government.
Notification of Delinquent Taxes
House owners who fail to pay the property tax bill receive notification from the local government. Tax delinquent properties are also listed in a local newspaper. Often the county tax collector is responsible for the collection of property taxes and bills the house owner. When the property taxes are past due, interest and other penalties are added to the bill.
After a set time established by the county or state, tax delinquent properties are subject to a tax certificate auction. An investor buys a tax certificate to pay the delinquent property tax bill. The investor is paid a fixed rate of interest during the time he owns the certificate. Tax certificates may be sold and transferred to other investors.
Tax Certificate Redemption
The house owner redeems the tax certificate by paying the property tax, fees, penalties, interest and assessments to the tax collecting agency. If the owner does not pay the property tax, the house may be sold at a tax deed auction or the investor may take over ownership. The county usually determines the procedure for disposing of tax delinquent property.
Who to Contact
Contact the tax collector of the county where the house is located. Obtain the local rules and laws that pertain to the sale and redemption of tax defaulted property. Pay close attention to the time that an investor may hold the tax certificate. Depending on the state or county rules, after a designated time period, the investor takes ownership of the property or the property goes to a tax auction. Determine if the county accepts partial payments or offers a payment plan.
Pay the Bill
Pay the full amount of the delinquent tax bill or enter into a payment plan approved by the county. Redeem the tax certificate before the holder of the certificate takes ownership or the house is sold at a county tax auction.
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.