Experiencing the loss of your home via a forced tax lien sale can be devastating. Tax sales can occur either due to outstanding property taxes as well as liens generated by other taxes due (i.e. income taxes). When you’re in the midst of such legal turmoil, you’ll probably wonder if there’s a way to stop this tragedy and get your home back. Fortunately, it turns out that there is a way. However, as with everything worth doing, the path can be tricky and full of dead ends. Yet if you’re willing to take on the laborious journey, know that a lot depends on your location, jurisdiction, and the availability of cold hard cash.
The Redemption Process
In some jurisdictions the court is willing to provide a homeowner a second chance. If the court has initiated a sale of the affected house via a tax sale, a soon-to-be former owner will be provided a period of time to pay off the balance that is due on the property. But this is not an easy fix. The redemption window is typically very short and requires cash up front. However, if you can quickly pull together the funds to cover all of the outstanding taxes and penalties owed, then you are rewarded by getting to keep your home after all. Again, however, time is of the essence; the redemption window in some jurisdictions can be as short as five days or less in order to trigger a successful recovery.
The Legal Side of It
Anyone can make a mistake, even lawyers. It may be possible that the tax agency lawyer made a mistake on your case. If the tax agency did not follow a legal process appropriately, then your own lawyer might be able to prove that the sale of your house should be stopped. It’s important to note that the public’s eyes are always on government agencies to make sure that they are doing their jobs correctly, and they don’t take kindly to governmental mistakes. With the burden of proof weighing so heavily on the government’s shoulders, your lawyer may have a shot at proving some small mistake to halt the process as inappropriate and win your case. That said, the win is just a temporary fix; the taxes are still owed on your house and need to be paid.
Have a Proxy Buy Your House Back
If you can’t outright prevent the sale of your house at a tax sale auction, then find someone who can buy it for you. It is technically possible to indirectly bid for and purchase your home back by means of a proxy, such as an agent, friend, and or family member. As always, different jurisdictions have different rules on just who can bid on a tax sale, so prior research is important. However, if you meet all the idiosyncrasies of your particular jurisdiction, then your party can attempt to buy your home for you and save it. While this sounds simple enough, it’s actually very hard to do. Think of what you are asking someone to do for you. You’re not asking someone to take out the trash; you’re literally asking someone to take on the legal debt and title of your home that you could not handle yourself. That’s a very risky venture for anyone to undertake financially and legally. Somehow you will have to come up with a sizable incentive to entice someone to go through such a hassle. What that reward or purpose is depends on your particular relationships and situation.
Rent It Yourself
Many buyers of property tax sales view them primarily as an investment tool. But the proposition of being a landlord who has to find trustworthy tenants can be daunting. A possible win-win temporary proposition would be to try and arrange to rent your old house from the new owner after the tax sale. They get the peace of mind of knowing that their investment won’t be destroyed because you love and want the house. And you get to remain in your old home in the immediate future with the hope that you might be able to buy it off the new owners at some point in the future.
You don’t always have to view a home tax sale as the permanent loss of your home. If you really want to hold on to your home, take a breath and be creative in solving the problem at hand. Tackle the dilemma of the tax balance due and utilize all of your financial and legal options to accomplish this.
Stretcher.com: article: “Buying Property at Tax Sales”
NETR Online: article: “Tax Lein Sales”
Howard County: article: “Tax Sale”
The U.S. Internal Revenue Service: FAQ: “General Questions on Seized Properties”