Tax Sales – Know Your RightsPosted on: June 27, 2021
Updated October 13, 2022
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What is a tax sale?
If you own your home or other property, you can lose it if you don’t pay your property taxes. If you do not pay, the government can sell your property for the amount of taxes owed plus some other fees. This is called a “tax sale.”
There are complicated rules about how a tax sale affects the homeowner. There are things a homeowner can do to avoid a sale. There are also things a homeowner can do after a tax sale to get back full legal rights and to undo the problems created by the tax sale.
Why is the tax sale happening on the property?
The government can hold a tax sale on a property if there are unpaid taxes.
The government can also hold a sale if it has another kind of “lien” on the property. A lien is a debt charged against the property.
A “lien” can happen, for example, if the government cuts the grass when the owner doesn’t take care of his or her home or because of other fines for not taking care of the property.
What happens at the tax sale?
The government puts the property up for auction. The asking price is the amount of the unpaid taxes, plus some fees and interest owed.
The government should give the homeowner notice of the tax sale ahead of time. There are rules about how much advance notice the homeowner should get.
The government will advertise the sale to the public.
This ad will appear in what is called the “official journal” for that parish. This might be the local newspaper.
The tax sales are also advertised on https://www.civicsource.com.
Once the tax sale starts, people can offer bids for all or even a part of the unpaid tax bill. If they offer to pay only part of the tax bill, the bidder could get only part of the property. Usually someone pays the whole bill to get a claim to your whole property.
If no one pays to buy the property, the government gets rights to the property. When the government gets rights the property is called “adjudicated.”
How can a homeowner stop a tax sale on their property?
Sometimes someone who owes property taxes can stop the tax sale.
There are three things a homeowner can do to stop a tax sale.
- If the homeowner is on active duty with the United States military, he or she must notify the tax collector of this fact to try to stop the sale. The federal law at 50 U.S.C. § 561 has more information about when being in the military can prevent a tax sale.
- The homeowner can stop the sale by paying the taxes and other fees owed, and the homeowner must do this before the opening day of the tax sale.
- The homeowner can stop the sale by filing for bankruptcy: the court will order a stop to the tax sale.
Does the original homeowner still own the house after a tax sale?
Yes, the ownership of the house does not change with the tax sale alone.
The person who bought the property must “record” the sale at the mortgage office. The property owner who owed taxes still owns the property for 3 years after the sale is recorded. (If Orleans Parish ended up with the property after the tax sale, and the property is blighted or abandoned the time can be 18 months.)
The property owner owing taxes can keep the property by paying the the government the original taxes and fees, plus any other taxes the tax buyer paid after the tax sale, plus 6% in fees and penalties. The property owner who owed the taxes and makes all of these payments gets a “Certificate of Redemption” restoring full rights to the property.
Unless the property owner is dead and there has been no succession, the government is required to send a notice 90 days before the end of the three-year period. The notice should say how much is owed and how to “redeem” the property. You can get copies of all notices sent by the tax collector from the parish assessor’s office.
If you redeem the property you get all your rights back. If you do not, the tax sale buyer can then get all the rights to the property, force you to move, and so on.
During those three years the buyer at the tax sale should get the property tax bills.
If more property taxes go unpaid, the property can go up for auction at a new tax sale.
Can the homeowner be evicted from his house after a tax sale?
Not right away. The original homeowner still owns the home, not the not the tax sale buyer.
Except for blighted properties, the original homeowner should be safe from eviction for the first three years after the tax sale.
Can a family member or other third party undo the tax sale by paying what is owed?
Yes. Anyone can pay the taxes, penalties, interest and other fees owed to undo the tax sale. The redemption will be for the property owner, regardless of who paid the money.
What happens if the homeowner fails to redeem the tax sale in time?
The original homeowner only gets a certain amount of time to pay to undo the tax sale by redeeming the property.
If the homeowner does not pay by the deadline to undo the tax sale, the homeowner can lose the property.
The buyer at the tax sale can get full ownership of the property by going to court. This is called a suit to “quiet title.”
The court suit to quiet title can end all rights of everybody but the tax sale buyer .
If the tax sale buyer files court papers to quiet title, he or she must use the correct legal way to deliver copies of the court papers to the homeowner and anyone else with an interest in the property. To see if an error was made that can be challenged, the homeowner should contact an attorney as soon as possible. The time allowed for a challenge depends on the type of error.
But if no one opens the door to accept the court papers, the buyer can get court permission to serve the papers on a special attorney, and you can lose your property without knowing about it.
Can the homeowner still redeem the tax sale property after getting sued in a Quiet Title lawsuit?
Maybe or maybe not. The court case can make it very hard or impossible for the homeowner to keep the property. The homeowner can try to make a deal with the tax sale buyer. The tax sale buyer can ask any price for the property, which can be bad for the homeowner. They can demand much more money than a timely redemption would have cost.
What if only a part of the property was purchased at the tax?
The tax sale is still a valid sale but the tax sale buyer can only get part interest in the home or property. If the property is not redeemed, the property can be sold at public auction and part of the proceeds will be paid to the tax sale buyer. The homeowner would receive any remaining funds. But the property owner loses the house or property because it gets sold at auction.
What if no one buys the property at the tax sale?
Then the government that was owed taxes gets rights to the property. The homeowner has a right to reclaim it by catching up with taxes and fees like those described above. But the time lines and options depend on how the city or parish wants to deal with the property. There are laws that the government may fail to follow. But the rules are more complex than if the property was purchased. Unless the property owner is dead and there has been no succession, the government is required to send a notice about how to redeem the property.
For more information on this process, see the following laws:
Tax Sales (La. R.S. 47:2121 et. Seq.) - http://legis.la.gov/Legis/law.aspx?d=631505
Tax Sale Certificate (La. R.S. 47:2155) – http://legis.la.gov/Legis/Law.aspx?d=631551
Adjudication Property Sales (La. R.S. 47:2196) - http://legis.la.gov/Legis/Law.aspx?p=y&d=631575
Tax Sale Auction and Notices (La. R.S. 47:2153) - http://legis.la.gov/Legis/Law.aspx?p=y&d=631545
Post Sale Notices (La. R.S. 47:2156 - http://legis.la.gov/Legis/Law.aspx?d=631552
Redemption of Tax Sale (La. R.S. 47:2241 et. Seq.) - http://legis.la.gov/Legis/Law.aspx?p=y&d=631596
Redemption Certificate (La. R.S. 47:2245) - https://legis.la.gov/Legis/Law.aspx?d=631613
Post Redemption Period Notice (La. R.S. 47:2157) - http://legis.la.gov/Legis/Law.aspx?d=631556
Quiet Title Process (La. R.S. 47:2266) - https://legis.la.gov/Legis/Law.aspx?d=631617
Quiet Title Notice (La. R.S. 47:2275) - https://legis.la.gov/Legis/Law.aspx?d=631622
Procedure to Annul Tax Sale (La. R.S. 47:2286 et. Seq.) - https://legis.la.gov/Legis/Law.aspx?d=631628
Nullity grounds (La. R.S. 47:2286 et. seq.) - https://legis.la.gov/Legis/Law.aspx?p=y&d=631628