What About Property Tax Foreclosures?

A bankruptcy filing can stop property tax foreclosures as well, and a Chapter 13 bankruptcy can provide a way of repaying outstanding taxes. You can lose your home even if you only owe a fraction of its value in taxes. I’m Peter Scribner, Esq., and I can help you save your home before that happens. Contact me as soon as possible if you owe property taxes you cannot pay.

Types Of Property Tax Foreclosure

There are three different ways houses might be foreclosed for payment of property taxes in our area:

DIRECT TAX AUCTIONS

In Monroe County and the City of Rochester, property tax foreclosures are held once a year, usually in the fall. The property is sold directly to a new owner at a public auction. A bankruptcy MUST BE FILED BEFORE THE AUCTION DAY to stop the foreclosure.

TAX LIENS SOLD TO PRIVATE COMPANIES

More often, Monroe County and the City of Rochester don’t actually auction off houses in tax sales. Usually, they sell their older property tax liens to private companies, such as Propel, Tower or American Tax Funding. To enforce the liens they purchase, these companies then must go through a regular court foreclosure process just like a mortgage foreclosure. The good news is that this usually takes months; the bad news is that this adds attorney fees and court costs to the amount of property tax you owe.

Often these companies will negotiate with you a payment plan to catch up. But if you cannot work out an arrangement that you can afford, bankruptcy will stop the process if filed before the foreclosure sale. A chapter 13 bankruptcy can then provide a way to catch up on all outstanding property taxes with payments spread over a period of up to five years.

STRICT TAX FORECLOSURES

Counties in the Rochester area outside of Monroe County, including Wayne, Livingston, Seneca, Livingston, Genesee and Orleans Counties, use a completely different method to foreclose on property taxes. In those counties, a lawsuit is filed listing all properties with outstanding property taxes. The property owner is given a deadline, usually four months later, to pay off the taxes owed and ‘redeem’ the property.

Once that redemption deadline has passed, ownership of the property is automatically transferred from the taxpayer to the county, no matter what the value of the property or amount of tax owed. So a property owner who owes, say, $20,000 in taxes against a house worth $200,000, could lose the entire house to the county if the property taxes are not paid by the redemption date. This is called a ‘strict foreclosure’.

In those outlying counties, there is usually a public auction a couple of months after the redemption deadline. In this auction, the county sells the property directly to a new owner and gets to keep all the money received. So if that $200,000 house sells in auction for, say, $100,000, the county keeps the entire $100,000, even though they were only owed $20,000 in taxes.

For these property taxes foreclosures, if you want to stop the foreclosure by filing bankruptcy it is VERY IMPORTANT that the case be filed before the redemption deadline. If a bankruptcy is filed before the deadline to redeem, the foreclosure is suspended and the property owner continues to own the house. And like in the other foreclosure situations a Chapter 13 bankruptcy can provide a way to catch up on the outstanding taxes.

If the redemption deadline has passed, it is still possible in some situations to file a bankruptcy and reverse the transfer to the county, but it is much more difficult and expensive and the outcome much more in doubt. If you cannot pay your property taxes before the redemption deadline, please call me as soon as possible to discuss your options

Call Me To Schedule A Free Consultation

You have nothing to lose except your debts by calling me at 585-261-6461 for a free consultation about how I can help you deal with a property tax foreclosure. I will give you an honest assessment of your situation. I will also provide clear answers to your questions about foreclosure and whether bankruptcy can help.