I found out that I have a neighbor that has not paid his city property
taxes for several years and he owes several thousand dollars plus
overdue penalties. This information is made public, online. He buys
a new car every two years so I know he can afford to pay property
taxes. So, I'm wondering if the city will ever do anything about
people who don't pay? How is it that property owners can get away
with this for so many years?
In many cases, the municipality will sell the rights to the money owed
on delinquent tax to investors who bid on it. The town gets the money
and the investor gets to charge interest with a lien against the
property. After a long enough period, I think they can actually
foreclose on the property if necessary.
In any case, the town usually winds up getting their tax money, because
their lien comes before everyone else.
This almost sounds like a reverse mortgage for the home owner who
plans to live there the remainder of his life. If he dies, the
executer pays the liens, sells the house and whatever is left goes to
holds a lien on that property. After a number of years they can
The procedure in Florida is the municipality does a reverse auction on
the bill, bidding down the interest rate to the lowest rate the
prospective lender will accept and the lender pays the tax bill. The
tax and interest continues to accrew on the lien until the lender can
take legal action (something liker 5 years). They they get title to
the property but that will come with all the other baggage so the
mortgage lenders, code enforcement or any other lien holders will also
have skin in the game. You have to be very selective when you buy
these tax certificates or you may end up losing money. The owner may
actually have more debt on the property than the property is worth.
Usually you can go on the county court clerk web site to see who else
has a lien before you jump in.
As I understand it, in Illinois, foreclosing on a tax lien would wipe out
the mortgages and other liens, therefore a mortgage company would jump in
and pay that tax lien before the place was sold for taxes and either add it
to the mortgage or foreclose on the mortgage as paying your taxes is usually
necessary to maintain the terms of the mortgage. As you said he may have
so much debt on the property that one way to come out with anything at
foreclosure is to have pocketed some of the money rather than paying those
debts. Or the property may be in an area that is so bad that no one wants
to own it and therefore hasn't been buying those tax debts. The city may
not even want it.
If he is behind there will be a tax auction which are held every year,
just because he has a new car doesnt mean he has any money, he makes
payments. Find out when your auction is, you can bid on it, then he has
a certain time to pay you back or its yours.
The tax auction is not the same as the foreclosure in Florida. They
auction off the tax bill every year, then after a time the property
reverts to all the lien holders in some strange hierarchy that you
better understand before you play the game.
I know people who have got great deals and others who just threw their
money down a rat hole by buying tax certificates. You really need to
know what you are buying and who else will be muscling up to the
trough when this goes over. Generally speaking the principle lender
will just bid the certificate down to the point that it is not worth
buying if you just want the interest.
The best deals are usually a "free and clear" property where there is
nobody paying the tax ... but they are hard to find. Usually these
things end up being a distressed property where the lender is already
upside down and they have to bid down the tax bill interest rate to
the point that nobody else wants to play. Then when they foreclose
they get a clean title.
That was the whole point--there will be variations in process/law in
virtually every state and even some fairly sizable perturbations
between local governments' handling of late tax payments--some, as
apparently so in OP's location are pretty slow in actually taking any
further action than the publication of delinquent taxpayers/properties.
Others are quite agressive in starting the collection process and one
can find every flavor in between...
Yep, here in WA it is a tax auction. Advertised in the paper x number
of times and sold on the courthouse steps. The owner has the option of
paying up all tax due right up until the sheriff says SOLD! and that
ends i. If it is sold, the previous owner has no recourse. I don't
know what happens to the other liens.
When I was a tax collector a few years back all I ever had to do was
make a friendly call to whoever had the first mortgage. They'd send
the money and tack it onto his payments. After a couple of times
they'd pay up and foreclose it themselves. Mortgage companies don't
like unpaid taxes.
It depends on the state law...
In Texas, people over 65 can fill out what is called a "tax affadit",
allows the tax liens to accumulate on the property until the property
is sold, or changes ownership (due to death of the owner, for
The liens accumulate with an 8% interest rate, and must be cleared
before clear title can be furnished to a new owner.
I do not know about other states, but they may have something
The purpose is to keep the taxing authority from taxing senior citizens
out of their home. It ONLY applies to those over 65.
Andy in Eureka, Texas
Mine got sold for taxes already twice, and I was able to redeem them.
Three years and it belongs to whomever paid the back-due taxes. It's
kind of embarassing to get your name in the paper. Some people love
going through the names to see if it's anybody they know is on there.
My friend almost lost her pitiful little house that way, too, to some
slum lord, she called them up and asked them why they wanted to take her
house. Her daughter loaned her the money and got her caught up, then
because she is poor, she got an exemption she didn't know she was
qualified for, but not before the back taxes, interest and fees were
Rather that find out what's going on with your neighbor and lending a
helping hand, most people are like sharks who will buy it right out from
under you if you are down on your luck.
I can't explain the new car though. Still it's in my category of MYOB.
:I found out that I have a neighbor that has not paid his city property
:taxes for several years and he owes several thousand dollars plus
:overdue penalties. This information is made public, online. He buys
:a new car every two years so I know he can afford to pay property
:taxes. So, I'm wondering if the city will ever do anything about
:people who don't pay? How is it that property owners can get away
:with this for so many years?
Where I live they eventually catch up to you. They'll give you a
deadline and if you don't pay by then they'll sell your house on the
courthouse steps to the highest bidder who will cover the back taxes.
The new owner of the property when the city sells it on a tax lien,
usually taxes plus interest.
They don't lose money on taxes unless the property is worth less than
the back taxes and they try to intervene before that. In Florida the
tax man gets his money every year. He just sells the debt. The guy
holding the certificate is the one who ends up with the lien.
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