Which Side Of A Tax Lien Foreclosure Are You On?

QandAI usually answer questions about how to profit from a tax  lien from the investor side. But I sometimes do get questions from people who are on the other side of a tax lien or tax deed. I thought that it might be helpful for you to read the answers to a couple of these questions in case you know someone who is on the other side of tax lien or has had their right of redemption foreclosed. Please keep in mind that I am not an attorney and the answers I give to these questions is not a substitute for legal advice but is for educational purposes only!

Home Lost To Tax Lien Foreclosure:

Question: I live in the state of Alabama, the time to redeem my house from a tax sale due to unpaid property taxes has expired. The buyer of the delinquent taxes has now been issued a tax deed. Is there any way that I can get my house back after a tax deed has been issued.

My Answer: I’m not sure if there is anything you can do. You would need to get an Alabama attorney who is very familiar with property tax liens. You may want to check with the revenue commissioner, and see what they tell you. Beyond that you will have to consult with an attorney. Unless you weren’t properly notified and they sold your lien in error you will not be able to nullify the sale. How did you let this happen? Paying the taxes is your responsibility whether or not you received the tax bill. There are exceptions, for instance, if you were serving your country overseas, or in bankruptcy the county is not supposed to sell a lien on your property. Even after the lien is sold, you still have 3 years to pay it off before an investor can take your home. So unless the legal procedures were not followed you would have had quite a long time to pay your taxes and redeem the lien. If you find that a lien on your property was sold in error, there is something you can do. You can file a petition with the county.

In most states, the mortgage gets wiped out in a tax lien foreclosure and does not survive the sale. The mortgage company may then try to come after you personally for what is owed. In Alabama, it is easy for the lien holder to receive a deed to the property at the end of the three year redemption period. The property does not have to be sold in foreclosure sale, so there are not likely to be any excess proceeds that you or the mortgage company can claim.

Options After Receiving A Pre-Foreclosure Notice

Question: My mother is the recipient of the pre foreclosure notice for tax sale certification. She’s 80 years old with annual income of $ 14,280 and wants to stay in the home. What can be done to avoid losing the home? The home is valued at about $120K and is in a depressed neighborhood, but, she would prefer to stay in her home. Is a refinance possible, HUD was the original mortgage lender in 1974.

My Answer: You can talk to the owners of the tax liens, but here’s the bottom line. The taxes have to be paid one way or the other. If she can’t afford to pay the taxes, she can’t afford to stay in the home. She can try to refinance, whether she will be able to or not I couldn’t tell you. I’m not a mortgage lender or banker. She would need to talk to her local bank. She should also look into any programs for seniors in her state that might help. And see if there are any property tax reductions that she can apply for – like a homestead rebate. Trying to refinance in today’s market might take longer than she has, since once the right of redemption is foreclosed, there is nothing she can do to keep her home. She might be better off selling her home to an investor if she can come away with enough money to put down on a property that is easier for her to afford.

Depending on the state that the lien is in, she may be able to work something out with the lien holder. Some states do not allow this though, in some states all of the taxes (including taxes from tax liens owed to an investor) have to be paid in full to the tax collector. The only way for have the lien removed and to stop a tax lien foreclosure is to pay of the entire lien amount that is owed. That does not mean that she has to pay all of the taxes if there are subsequent tax liens to the one that is foreclosing or if there are current taxes due. She would only have to pay the lien that is threatening foreclosure. Also the sooner she can pay it the better, because in some states the interest in calculated daily and can really ad up as more time goes by!

Legal Disclaimer: I am not  an attorney or legal professional. This information is for educational purposed only and is not legal advice. If you need to stop a tax lien or tax deed foreclosure or to see if you have any recourse after your property has been sold at a tax sale, seek the advice of a legal professional in the state that the property is in.





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