- Each jurisdiction has its own statutes relating to delinquent property taxes. After a certain period of time, unpaid taxes on a house or commercial property will be considered delinquent. The taxing authority is required to give notice to the owner and, in some states, must also file an action in civil court to seize the property.
- The taxing authority then schedules a public auction, at which any interested bidder may offer the amount of money she wishes to claim ownership of the property. The minimum bid is usually set at the outstanding amount of taxes due, plus any penalty and interest levied for the delinquent taxes. If no bidder reaches the minimum bid amount, then the local government takes possession of the property.
- Tax deed sales are followed by redemption periods, during which the previous owner may reclaim the property by paying all back taxes and interest due, plus any penalties assessed for the delinquent taxes, as well as the costs associated with the tax deed sale. States have various redemption periods, ranging from six months to two years.
Tax Deeds and Tax Liens
- States that do not provide for outright sale of the property at auction may sell tax lien certificates. These are certificates for the full amount of back property taxes, plus interest, which can be redeemed by the previous owner or through the future sale of the property, after which the tax lien must be paid in full. The holder of a tax-lien certificate can force the public auction of the property if the taxes go unpaid after the close of the redemption period. Tax-lien certificates represent a speculative investment on the repayment of taxes at some future date, while tax deed sales represent outright purchase of a property, which can then be occupied, improved and/or resold.
- The taxing authority or local government must make a public announcement of the tax deed sale before it takes place. To find a tax deed sale, visit your county courthouse and inquire at the clerk's office about such auctions . Many jurisdictions have auctions listed online. To take part, you will have to join other bidders at the courthouse where the auction is held; some jurisdictions provide for online auctions of tax-deed-sale properties as well as tax-lien certificates.