Losing your home due to delinquent taxes

by Rod Williams

Often people who are behind on their mortgage are also behind on paying their taxes if the taxes are not escrowed. You do not want to lose your home due to unpaid taxes. Here is how the payment of property taxes works.

Taxes are due in arrears. That means, you are not paying your taxes for the upcoming year but for the year just past. The tax year is the calendar year. The tax bill for 20011 is mailed out in October 20011 and are due by February 29, 2012. After that date a penalty of 1 ½ % interests is added. The Trustee’s office holds the tax bills until March 1, 2013. Up until that time, the taxpayer, may go to the Trustees office and pay the taxes and the accumulated interest. After that March 1 date the tax delinquency is referred to Chancery Court. The Clerk and Masters office handles the taxes at this point. Metro will have filed a legal action to sell the property for back taxes prior to that March 1 date.

On March 1st, the Clerk and Masters Office will send out a notice to delinquent property owners saying they have 30 days to pay the delinquent tax lien or it will be sold. THE TAXPAYER MAY PAY THE AMOUNT OWED anytime before the sale and the lawsuit will be dismissed. (Cashier's Check). After the March 1 2013 date, additional court cost and legal fees are added. There is a title search that has to be done and other legal procedures prior to the Sale. So the first time it would be sold is June, 2013, but it could be later. There is usually one sale per month from June to December. The sales are advertised in our daily paper, THE TENNESSEAN, approximately twenty (20) days prior to the auction.

The owner may redeem the property up to a year after it is sold for back taxes but there is an additional fee of 10% per year to redeem it. Also, the person redeeming his home may have to make payments to the buyer for cost incurred.

The tax lien is the first place lien on a property, meaning the city gets their money before any goes to a mortgage company, so if a client is late on their taxes, the mortgage company would rather pay the taxes than let the property get sold in a tax sale. If a property is foreclosed upon, the mortgage company would have to pay the taxes anyway. If there is a mortgage on the property and it is sold at a tax sale, the mortgage company is the likely buyer, but the owner would have a year to redeem it. So, the mortgage company would rather pay the taxes for the homeowner, which they may do, and then foreclose rather than purchase it at the tax sale.

Few people who have a mortgage on a property lose the property due to a tax sale. The situation as described above is what usually happens.

I know of no agency that will help you pay your property tax bill. One of the requirements for the Hardest Hit Fund in Tennessee is that taxes and insurance be escrowed. However, if one otherwise qualifies, it is often possible to set up an escrow account at the Hardest Hit closing.

For more information call me, Rod Williams, 850-3453. There is never a cost for my services.