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Every property owner is required to pay
property taxes to the applicable local and state governments based
on the value of the property owned and the state in which one owns
the property. They are also sometimes refereed as real estate taxes.
There are times when the property owners are unable to pay the
required property tax. When this happens, they become delinquent.
Once the delinquency has been established, the appropriate governing
authority is in charge for collecting property taxes. This
collection can be achieved by a tax sale or tax auction.
All 50 states in the US have their own separate set of laws
regarding the course of action on collecting the delinquent taxes.
Most often the local county government is in charge for this
procedure, as collected property taxes are usually used for the
improvement of local communities. There are two types of government
tax sales used in the United States, tax deed sales and tax lien
certificates.
The local governments hold an auction
called the tax deed sale for tax delinquent property. Generally, the
minimum bid is the total sum of taxes owed and any administrative
charges and interest on the amount owed. The highest bidder at the
tax deed sale is awarded the deed to the property. Note that
different state follow different set of rule about the restrictions
on possession and the time lapse required before you are assigned
the absolute deed.
Tax lien certificates are also
auctioned and valued at taxes owed, plus administrative charges and
interest, but there is where the similarities end. In the case of
tax lien certificates, there is no transfer of the property deed at
the time of auction. Once the tax lien certificates are sold, the
delinquent taxpayer is required to pay back the amount of the lien
plus interest charges, usually 16-18%, back to the owner of the
certificate. Now, if the delinquent taxpayer fails to do so within a
set time period as decided by the governing authority, the owner of
the tax lien certificate can be awarded the deed to the property
after properly foreclosing on the lien.
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