The Ugly Truth About Delinquent Property Taxes
Are you delinquent in paying your property tax bills? Perhaps you paid for the current year, but still owe back taxes on the previous year when you had trouble paying the bill? Can't catch up? DANGER WILL ROBINSON, DANGER!!!! Each year home owners who are delinquent in paying their property taxes may find that they receive a letter from a 3rd party company stating that if their delinquent taxes are not paid by a certain date, then they may be foreclosed on to satisfy that tax debt. (Not to mention all the late penalties plus any other fees that may come along for the ride.) OWNERS BE AWARE! Third party companies CAN purchase delinquent tax bills. Let me repeat that.....THIRD PARTY COMPANIES CAN PURCHASE DELINQUENT TAX BILLS! That means if you have not paid your tax bill by April 15th (or 3 months and 15 days from when the tax bill was originally due) YOU ARE DELINQUENT and in Kentucky, 90 days after declaration of delinquency, third-party companies may start to purchase these bills.
How can this be, you ask? Well back in 2009, the State Legislature passed a bill called the HOUSE BILL 262 which allows for third parties to purchase these bills under specific guidelines. For example, would you believe that back in 2010 there were 855 delinquent property tax bills in Boone County alone, totaling nearly $1.4 million dollars? WOW! DID you know that 20 different companies had registered back then to purchase delinquent tax liens in Boone County that year?
How much equity do you already have in your home? Is it paid off? How horrible would it be if you owned the home clear and free and didn't pay your property tax? Think the third party bill holder could take it from you? They could, but they'd have to follow the guidelines.
So how does the third party start the process? Well, when the delinquent tax bill sale occurs, the third party companies (which have to be registered) can begin to purchase the bills. They then must also notify the owner of their purchase. They can begin foreclosure proceedings one year later on the homeowner. They can also collect 12% interest per year, admin fees and attorney fees. (That's in addition to the actual tax amount due, a 10% penalty, a sheriff's fee plus 10% add on fees, and advertising costs.) Do I have your attention yet?
So if you are in this position, what can you do? Well, if you do have equity in the home you are trying to protect, you can contact your mortgage lender and attempt to get the amount added to your balance. Another is to be sure to have your taxes escrowed with your monthly payment so that you do not fall behind. But, if you don't have them escrowed and are responsible to save up for the big tax date, the best thing to do is to pay these bills on time and don't let yourself get into this situation. Knowledge is power. Know that tax bills can be bought by third party companies and you could quite possibly loose your home if you are delinquent!
Proceed with knowledge and be empowered to make the right decisions in all your real estate transactions.