Most people would agree that a "tax sale" is a situation to avoid if at all possible. But, what exactly is a tax sale? What happens when a piece of property is being prepared for sale? And, more important, what safeguards are in place to protect the interests of the property owner?
A tax sale is the sale, by a government, of a piece of real (land/home) or personal property (boat, office equipment, etc) to pay for delinquent taxes (taxes that have not been paid by the due date).
If a tax sale is scheduled, an auction of the property is conducted on the courthouse steps on the first Tuesday of the month. However, long before the sale begins, the Tax Commissioner's office begins a lengthy process designed to protect the rights not only of the property owner but also of any renters and mortgage or lien holders.
The procedure for preparing a tax sale is outlined below:
- Send a "Notice of Intent to Issue a Fi Fa" to the property owner at least 30 days in advance of issuing and recording the fi fa. (No notice is sent on personal property.)
- Issue the fi fa and record it in the office of the Clerk of Court (after the 30-day period is up).
- Send a "Notice of Levy" to the property owner (any time after the fi fa is recorded).
- If the property has a home on it, within 5 days of sending the Notice of Levy, send a "Notice to Owner and Tenant" to the occupant of the property. Post a copy of this notice on the property.
- At any time after sending the Notice to Owner and Tenant but at least 20 days before advertisement of sale, send a "Notice to Holder of Mortgages & Liens" to the mortgage or lien holders. Send an advertisement to the newspaper to run for 4 consecutive weeks before the sale.
- No later than 25 days before the sale, mail a "Notice to IRS" to the Internal Revenue Service if a Federal Tax Lien had been placed on the property.
- Notify the property owner again at least 10 days before the sale with a "Notice to Defendant."
- If the taxes and other fees are not paid by the first Tuesday of the month, auction off the property on the courthouse steps.
As can be seen, this process, which takes approximately two months from start to finish, gives the property owner ample notice of an impending sale and allows him/her the opportunity to prevent it by paying the taxes and any other charges owing.
Sales of personal property are final, but real property can be redeemed for up to one year by paying the new owner the amount of the winning bid plus 20 percent (this must be done through the Tax Commissioner's office). The new owner is advised not to spend money on changes or improvements to the property until after the year is up because such expenditures cannot be reimbursed.