Homeowners always must pay property taxes. Whenever they occupy and live in this property, or if it’s vacant. Each homeowner pays property taxes based on home’s current assessed value. Otherwise, non-paying taxes or being behind can lead to tax foreclosure.
The government uses the money that these taxes generate to pay for schools, public services, libraries, roads, etc.
If you have a mortgage, the loan servicer might collect property taxes. as a part of your mortgage payment. In this case an escrow account is your auto-payment option. But if this option is not available, you need to pay property taxes directly.
When homeowners don’t pay their property taxes, that outstanding amount becomes a lien attached to the property. A lien adequately makes your property act as collateral for the debt.
All states have laws allowing the local government to sell homes through a tax sale process to collect delinquent taxes. In North Carolina, if you get behind in paying your property taxes you might lose your home to tax foreclosure.
Mercifully, you’ll find out about the tax foreclosure sale before it happens. So you will have the chance to get current on the delinquent taxes + interest and fees, to put a stop to foreclosure and losing your house.
If you let the foreclosure, go through to a sale, you get short time afterward to reclaim the property. (Read the next post)
How Tax Foreclosures in North Carolina Work
Once a real property tax bill becomes delinquent in North Carolina, the tax collector may foreclose its tax lien. The foreclosure process either goes through the court (similar to a judicial foreclosure) or through a process called “in rem.”
With this kind of tax foreclosure, the tax collector files a lawsuit against you (the homeowner) in court. When the tax collector files the foreclosure action with the court, you’ll receive a summons and a copy of the complaint (the lawsuit). (N.C. Gen. Stat. § 105-374).
If you don’t respond to the suit and provide a valid defense, like you aren’t actually behind in your taxes, or pay the delinquent amounts to get current, the court will enter a judgment and order county will sell your house at a public auction.
After your home is sold to satisfy the tax debt, the sale remains open through an upset-bid period. The upset-bid period generally lasts for ten days after the commissioner files a report of the foreclosure sale.
If someone enters an upset bid during this time, the sale will stay open for another ten days. If someone enters a subsequent upset bid, another ten-day starts. Once ten days go by without an upset bid, the court will confirm the sale. Once the sale is confirmed, the buyer gets a deed to the property after paying the purchase price.
In Rem Tax Foreclosures in North Carolina
Instead of filing a lawsuit, the tax collector can choose to use an alternative process called an “in rem” foreclosure. With an in rem foreclosure, the tax collector files a certificate with the court. This step is referred to as “docketing.” This step effectively creates a judgment against your home in the amount of the taxes, interest, and all applicable fees.
At least 30 days before docketing the judgment, the tax collector must send you a notice of the foreclosure. It should be done by registered or certified mail, return receipt requested. If the tax collector does not receive a return receipt indicating that you got the notice within ten days, the collector must make reasonable efforts to locate and notify you:
- posting the notice on the property
- mailing a notice to the property address by first-class mail, and
- publishing it in a newspaper.
At any time after three months after docketing, but no more than two years from the indexing of the judgment, the tax collector can file a request for execution with the court. The court then orders the sheriff to sell your home to satisfy the tax debt.
If you found yourself in the situation like described above, please contact us Today to discuss all available options. Besides saving a property from foreclosure you need to take steps to save your credit for your less stressful future.