Tax Delinquent Property vs Tax Forefeited Property. Post 7

Mitch Goldstein | Coach Mitch | April 29th, 2007

Coach Mitch’s REFLECTIONS™

Let’s define our terms

A property that is tax delinquent is one that has a tax bill outstanding against it.

A tax forfeited property is one where the taxing jurisdiction has followed legal procedures to take a property away from the previous owner because the outstanding taxes have not been paid within the legally mandated time frame.

The property is tax delinquent up until that moment that a judge (typically) signs an order to “take” the property.

Until the judge signs the order, the previous owner typically still has the ability to get his property back. In almost all taxing jurisdictions, where a judicial or ministerial foreclosure has occurred, the previous owner can get the property back by paying the taxes, interest, penalties and administrative fees.

It’s not over ’til it’s over

However, when a tax deed auction occurs, and another person buys the property, all ownership is severed. Unless it’s not!

In many states, the law requires that the taxing jurisdiction, typically the County Legislature, must give the final approval. They can reject any offer, for any reason or no reason. The previous owner can also appeal to the County Legislature for clemency, asking that the auction be ignored. This often happens if the monies owed are available to be paid or if a person of influence intercedes.

In northeastern states, where the towns often have jurisdiction, many properties are scooped up well before a tax auction can take place. The property is purchased by some connected person for “consideration.”

Even at this point the previous owner still has some rights. Typically, the previous owner, or a person of interest, has two years to proceed with a claim that his due process rights were violated during the tax foreclosure process. That is why title companies do not often issue a title insurance policy to a property purchased at a tax deed sale until after the statutorily mandated time has expired, often two years or more.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

Hoping you can always pay your taxes –