By Chesley Payne
Property tax issues are among the most misunderstood and confusing issues concerning property ownership.
The confusion generally comes from two situations. The first is a property owner who has failed to pay property taxes and their property has been sold at a tax sale. The second is by an investor who “buys” a property at a county tax sale.
The first and second situations are generally two sides of the same coin, and the rules apply to both. First, when you “buy” a property at a tax sale, you are simply buying the right to pay the taxes for two more years and earn the right to receive a tax deed at the end of the third year. Once you receive the tax deed, you will still have to pay the taxes for three more years before you can file a quiet title legal action to obtain clear title to the property.
In most instances, the original owner redeems the property by paying the amount of taxes paid, plus 12 percent interest. Additional amounts are allowed to be collected by the tax purchaser, but these amounts are usually amounts like the reimbursement of the cost of any necessary repairs to the property made by the tax purchaser. These are costs that a tax purchaser are rarely advised to pay in the first place.
However, the three-year periods referenced previously won’t matter if the original owner retains possession of the property. So long as the original property owner retains possession, the right of the original owner to redeem the property taxes will not expire. The tax purchaser may simply be stuck paying the taxes year after year until someone decides to redeem the property.
While 12 percent is a much better return than most are receiving on their money these days, the cost and expense of obtaining this return can wipe out any gain unless you are property advised. There are many issues involved in property tax issues.
As always, reach out to an attorney to discuss these items to develop a better understanding of your situation.
