States have two ways of dealing with unpaid property taxes. They can authorize their county tax collectors to issue tax lien certificates or authorize the tax collectors to issue tax deeds. If the property is in a tax deed state, you can get title to the property by being the high bidder at a public auction. If the property is in a tax lien state, the procedures can vary from one state to another. The county tax collector’s website provides the instructions you need on how you can obtain tax-delinquent properties.
Overdue Property Taxes
Once a year, every county tax collector or tax assessor nationwide mails out property tax bills to real estate owners. Property owners can usually get a discount off their taxes by paying the amount early. Taxes that are unpaid after the deadline are considered overdue. If they remain overdue long enough, the county tax collector marks them as delinquent. If the property owner does not pay the delinquent taxes before the deadline, the tax collector will issue either a tax deed or a tax lien certificate to recoup the taxes.
Getting a Property in a Tax Deed State
There are 22 states that issue tax deeds. Once a year, these states hold a public auction to sell the tax deeds. Bidding starts at the overdue tax amount and ends when there are no more bids. After the high bidder pays for the property, the tax collector records a tax deed to purchaser in the public records and mails it to the new owner.
Getting a Tax Certificate in a Tax Lien State
There are 23 states that issue a tax lien certificate for every property that has delinquent property taxes. County tax collectors hold an annual auction to sell the tax liens. Participants bid down the interest rate until the bidding stops. For example, Florida bidding starts at 18 percent and is bid down in 25 percent increments. The winning bidder receives the tax lien certificate. The tax certificate owner must wait two years from when the certificate was first issued before applying for a tax deed to force a property sale.
Getting Property Ownership in a Tax Lien State
You can obtain tax lien property in one of two ways. In states like Florida, the tax deed is forwarded to the county clerk, who puts the property on the auction list. A public auction is held, and the tax deed owner must outbid all other bidders to get ownership of the property. In states like Arizona, the tax certificate owner does not have to apply for a tax deed. He must pay all outstanding property taxes and after three years can file a foreclosure action against the property owner. There is no public auction of the property.
- Texas Controller of Public Accounts: Paying Your Taxes
- Four Tax Lien Certificates: Tax Deed States -- 22 States to Choose From
- San Diego Tax Collector: Tax Collection FAQs -- Annual Property Tax Sale Auction
- Escambia County Tax Collector: Florida Tax Certificate Process
- Walton County Clerk of the Court: Tax Deed and Foreclosure Sales
- Pinal County Treasurer: Arizona Tax Certificate Process
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