A Tax Sale is Serious Business

Of the many different types of people who have been affected by the economic downturn that has spread across the United States in recent years, those who are holding an outstanding mortgage are among the biggest targets. This is partially because they are potentially at risk for having their home sold in a tax sale.

For many of these individuals, their mortgage is the largest debt they have on their financial books. At the same time, when someone in the family lost his or her job and money became harder to come by, it is also the one payment that typically becomes the most difficult to make.

When this happens, there are many different courses of action that can help an individual or family continue to pay off a house without having to default on the mortgage and lose the property. If none of these are effective, however, then it is very possible that the house could be put up for a tax sale.

While a tax sale is typically one of the last resorts that banks, creditors or other holders of a mortgage will use to avoid losing money on a property, it is not particularly uncommon. In fact, houses both bought and sold in these sales have become more common in recent years due to the economic climate.

A tax sale can become possible once the holder of a deed fails to pay his or her property taxes for a given period of time, which is usually set by the local government in the area where the dwelling is located. Once this occurs, the local government alerts the holder of the mortgage that the home will be sold to a third party if the money owed is not received in a timely fashion.

If the taxes are not paid, sales are typically carried out as an auction that is open for public bidding. The starting price for bidding is usually the amount of the taxes owed plus the associated fees that will cover any proceedings related to the purchase of the dwelling. Depending on how desirable the building or land is, the price can remain around this amount or become significantly greater.

In some areas, the original owners are given a period of time during which they have the option of reclaiming their property. This can be accomplished by paying the amount that it was auctioned off for, plus an additional sum that serves as a penalty for the delinquent taxes. Depending on the specific area in question, this period of time can range from a few months to a year.

Despite it being a transaction that is ultimately forced on a mortgage holder, a tax sale is not only completely legitimate; it is also most certainly legally binding. This means that anyone who may not be caught up on property taxes must be sure to do so in order to avoid potentially losing their home.