Property taxes are an essential aspect of homeownership, supporting various public services and infrastructure. In Maryland, failure to pay property taxes can lead to a tax sale, where tax lien certificates are auctioned to the highest bidder. Understanding the tax sale process, the implications of unpaid taxes, and your options as a homeowner is crucial to avoid potential complications. In this article, we’ll explore what happens if you don’t pay your property taxes in Maryland, detailing the tax sale process, the right of redemption, and the benefits of selling your house to a reputable company like Yes I Pay Cash.
What is a Property Tax Sale in Maryland?
A tax sale is the process where tax lien certificates are sold at a public auction to the highest bidder. When property taxes remain unpaid, the county places a lien on the property, which acts as a debt attached to it. The county then sells these unpaid tax debts as “tax lien certificates” through a tax sale. It is important to note that only the debt and fees are auctioned, not the actual property itself. The homeowner continues to own the property, while the purchaser of the tax lien certificate gains the right to foreclose on the property if the homeowner fails to pay off the debt within a specific timeframe.
The Tax Sale Process in Maryland
Any unpaid property taxes create a lien on the property from the due date until they are paid. This lien is similar to a mortgage and remains attached to the property. To recover the unpaid taxes, the county organizes a tax sale, where they auction off tax lien certificates to interested buyers. During the tax sale, the highest bidder acquires the tax lien certificate, and the county’s lien on the property is transferred to the purchaser.
It is important to understand that the tax lien certificate represents the debt owed, not ownership of the property. As the homeowner, you still retain ownership of the property even after the tax sale. However, the purchaser of the tax lien certificate gains the right to foreclose on the property if the homeowner fails to clear the debt within a specific period, known as the “right of redemption” period.
Notice of Property Tax Sale in Maryland
At least thirty days before the property is first advertised for tax sale in a newspaper, the county is required to mail a statement to the person listed as the owner on the tax rolls. This tax sale notice includes the owner’s name, the amount of taxes due, and a warning that failure to pay the taxes will result in the property being sold at the tax sale auction.
The purpose of this notice is to inform the property owner about the outstanding taxes and provide an opportunity to settle the debt before the property goes to auction.
The Certificate of Sale
Around six months after the tax sale, the purchaser receives a certificate of sale from the Collector. This certificate confirms the sale of the tax lien certificate and includes essential details such as the date of sale, the amount bid, the advertised amount, and the annual interest rate payable upon redemption.
The certificate of sale remains valid for two years from the date of issue unless the purchaser initiates a legal proceeding to foreclose the homeowner’s right of redemption.
Right of Redemption after Property Tax Sale in Maryland
The right of redemption gives the homeowner the opportunity to redeem the property by paying off the debt, interest, and any subsequent taxes with related interest and penalties until a court order finally forecloses the right of redemption.
During the redemption period, the homeowner retains all rights to the property and can continue to live in and exercise their ownership rights until the right of redemption is foreclosed.
The Winning Bidder Can Initiate a Foreclosure
After six months from the tax sale (nine months for owner-occupied residences in Baltimore City), the purchaser can file a complaint in Circuit Court to foreclose all the homeowner’s rights to redeem the property, provided that all notice requirements have been met. If the purchaser does not initiate a foreclosure action within two years of the sale, the certificate of sale becomes null and void, and the purchaser loses the right to foreclose.
It’s crucial for homeowners to understand that the longer they take to pay off the tax lien certificate, the higher the risk of foreclosure.
Selling Your House Before a Tax SaleIf you find yourself facing financial difficulties and need to sell your house before a tax sale, consider reaching out to reputable house buying companies like Yes I Pay Cash. Selling your property to such a company can offer several benefits, including:
- Quick and Hassle-Free Process: House buying companies often offer a straightforward and efficient selling process, allowing you to avoid the complexities of a traditional real estate transaction.
- Cash Offers: Reputable companies like Yes I Pay Cash typically offer cash for your property, enabling a faster closing and providing immediate funds to address your financial needs.
- As-Is Sales: You can sell your property in its current condition, avoiding the need for costly repairs or renovations.
- Avoiding Foreclosure: Selling your house to a house buying company can help you prevent foreclosure and the negative impact it can have on your credit.
- Expert Assistance: These companies have experienced professionals who can guide you through the selling process and answer any questions you may have.
What Happens If I Don't Pay Property Taxes In MD - Related Questions
Can I lose my property if I don't pay property taxes in Maryland?
Yes, if you fail to pay property taxes, the county may sell the tax lien certificate, and the purchaser gains the right to foreclose on your property if you don’t pay off the debt within the redemption period.
What happens if my property is sold at a tax sale in Maryland?
If your property is sold at a tax sale, you still own the property, but the purchaser holds the tax lien certificate, entitling them to the outstanding debt and the right to foreclose if the debt is not cleared.
How long does the owner have to redeem the property after the Tax Sale?
You may redeem the property at any time until your right to redeem has been foreclosed by a legal decree. This means that you can pay off the debt to the County or Baltimore City and clear the lien on the property after the tax sale, but it must be before the lien purchaser receives a legal judgment that forecloses your right to redeem your property. Once the purchaser does this, it is too late to redeem and the purchaser may take title to the property.
Can I continue living in my property during the redemption period?
Yes, you retain all rights to your property during the redemption period and can continue to live in and exercise ownership rights.
What if I can't pay off the tax lien certificate within the redemption period?
If you are unable to pay off the tax lien certificate within the redemption period, the purchaser can initiate foreclosure proceedings to take full ownership of the property.
Bottom Line: What Happens if I Don't Pay My Property Taxes in MD?
Understanding the implications of unpaid property taxes in Maryland is crucial for homeowners to protect their valuable assets. The tax sale process, where tax lien certificates are auctioned, can be a daunting prospect. However, by staying informed and taking timely action, homeowners can navigate this situation with confidence.
Remember, each county in Maryland issues its bidding rules for tax sales, so it’s essential to familiarize yourself with local regulations. Consult with a qualified attorney if you require personalized advice regarding your specific situation.
Disclaimer: This article is for informational purposes only and should not be construed as legal or financial advice. Please consult with professionals for advice specific to your situation.