What happens if I don’t pay my property taxes?
Hey guys, I’m Brad with Arbor View Properties. We’re a house-buying company out of North Metro Atlanta, and we buy houses all over the Metro Atlanta area. I’m sure you’re probably wondering what happens if you don’t pay your property taxes.
We buy a lot of houses from people who are behind on their property taxes and a few things happen.
It really depends on the County that you live in. Here in Georgia, some counties will sell that tax lien at auction to an investor.
In the state of Georgia, there’s a 12-month right to redemption period. So that basically means that if you’re delinquent on your taxes and the property goes to tax auction and the County auctions off that property and it ultimately ends up selling for let’s say $1,500, for the amount of the taxes. Okay? You as the homeowner now have 12 months to redeem that and you can take your property back. The reason the investor does it is because you have to pay them their $1,500 they invested plus interest if you redeem it. The interest rate or the amount of the interest will depend. So you need to check with your particular County. A lot of the counties do have information on their websites about what happens with the tax lien sale and how much the interest is due and all those things. So you definitely want to explore that. But what will happen is, let’s say you have to pay 1,500 back plus let’s say the interest is 20%. So 20% of 1,500 is … $300. So you would have to pay them back $1,800 to get your property back, to redeem it.
The investor cannot actually take legitimate title to the property until after that 12 months is up. Then what they would actually have to do is foreclose on the property. They would have to evict you from the property and get you out of the property. Then they may have to go through what’s called a quiet title process to clean up any title issues on the property. That could take another 6-12 months to do a quiet title suit. It takes a little while.
So, basically, if you don’t pay your taxes, the property can go to tax sale and they’ll actually sell it for the amount of taxes because the government wants their money. So the only reason they do the auctions for the taxes is so they can get their money.
Investors are going to give them their money and now you have to go to the investor to get your house back and pay the investor off their amount plus interest. The reason the investors buy it is because let’s say the interest is 20%. Well, they’re making a 20% return on their money because they’re fronting $1,500 cash. And then, if you pay them off, then you owe them 1,800. So they get 20% interest return on their money and they get 1,800 back. Their worst case scenario is that you pay them off. The best case scenario is that they just bought a house for $1,500. Now granted, they’re going to have to go through a quiet title and it’s going to take some additional monies to clear up the title on the property. And they’re going to have to either foreclose or evict you out of the property, but they can get a house for a few thousand dollars that’s worth maybe let’s call it $100,000.
Now, there may be other liens on the property and other mortgages that need to be satisfied and that’s the whole purpose of the foreclosure and quiet title action. But the reason they do it is because they can get a house for really, really cheap, but they have to be patient. They have to wait an entire year before they can even attempt to try to take the property back.
So that’s what happens if you don’t pay your taxes…
Some counties in the Metro Atlanta area will actually just continue to lien the property forever and ever, and ever. So you could just have years and years of liens.
We had one recently we made an offer on, they hadn’t paid their property taxes since 2010. So it was nine years of delinquent property taxes. They owed the County $18,000 in delinquent taxes on the property, but the County never put it up for tax lien sale. They never sold it off. So, there could be a number of reasons why they wouldn’t sell it off.
A new public office holder, a new tax commissioner could be appointed next year. And that tax commissioner could come in and decide, “Hey, we’re going to sell off all these old tax liens.” Even if they haven’t been doing it for years. Your property could get sold off at a tax lien auction, and someone could take your property and you could lose it for the amount of the property taxes. So there’s a risk there that happens. Now, again, you still do have a 12-month right to redemption period.
You can pay those taxes back and redeem your property, the taxes plus the amount of the interest, to redeem your property and get to keep it. But there’s a risk there that you could lose your property for the amount of the taxes. Again, it depends on the County. You should check with your County and validate with the County what their rules are on that. And most of them all have that listed on the tax commissioner’s website. But that’s what can happen if you don’t pay your taxes.
At Arbor View Properties, we purchase houses all the time from people who haven’t paid their taxes. What happens is at closing, the closing attorney pays the amount of the taxes off to the County. So let’s say you owe the County $5,000 in delinquent taxes, that would just come out of your closing proceeds on the property.
So let’s say you’re selling a property for $100,000, at closing, you’ll walk away from the closing table with $95,000. They’ll send a $5,000 check to the County, and they’ll pay off the delinquent taxes, and then the title of the property transfers to us if we buy it.
That’s how it works.
That way the money’s coming out of your closing proceeds, you’re not having to front that before closing. It’s just coming out of the closing proceeds at closing. So, I hope that makes sense. That’s what can happen if you don’t pay your property taxes, the County could sell your house off at a tax lien auction, or they may just put liens on it forever.
All that lien means is “you owe us money and that sticks to the property”. So if you ever go to sell that property, that lien has to be paid off and that lien has to be satisfied in order to transfer title to the property. There is not a single closing attorney or title office in this state that would close and not pay off those taxes. They have to.
There’s a lien, they can’t transfer title, they can’t get title insurance, they can’t give you a warranty deed or the buyer a warranty deed on it. So, that’s what can happen if you don’t pay your taxes.
If you do have a house that you’re interested in selling and you want to give us a call, our number 770-810-5715 or You can fill out the web form on our home page and we’ll give you a call as soon as possible and chat with you about your house.
Thanks again, guys. Hope you have a great day.