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.
At the least he won't be able to sell the house until back taxes are paid.
it looks bad for the municipality to foreclose and sell for taxes, so they sell the debt and liewn the property and everyone makes money.......
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 the estate.
As the other posters have said, somebody is paying those taxes and now holds a lien on that property. After a number of years they can forclose. 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.
Here, it goes on the auction block, its gone...
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.
J.
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...
Andy writes:
It depends on the state law... In Texas, people over 65 can fill out what is called a "tax affadit", which allows the tax liens to accumulate on the property until the property is sold, or changes ownership (due to death of the owner, for instance). 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 similar...
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 paid.
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.
Nasty business.
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.
Harry K
: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.
Can't you mind your own business?
Tax cheats ARE his business. Who do you think makes up the difference for what tax cheats don't pay?
CWM
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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