When a homeowner falls behind on taxes, they face a lot of challenges.If you’re behind, it’s crucial to know your options and how to navigate the complexities of tax lien certificates and tax foreclosure sales. This guide will provide you with essential information and practical steps to help you manage your situation.
Here in the Kansas City Metro, we have multiple states and counties and they can vary as to how they do things. In general Counties in Kansas do not sell Certificates and instead foreclose on the property for the back taxes after so many years of non-payment. In Missouri, counties generally sell certificates, and after three years, they foreclose on the house. This is true for most of Missouri except for Jackson County and St Louis County.
Understanding Tax Lien Certificates
When homeowners don’t pay property taxes, the county offers a tax lien certificate to the highest bidder. The local government can sell these certificates to investors to recover the amount owed. The investor then has the right to collect what they’ve paid, plus interest, from the homeowner. If you’re behind, knowing how tax lien certificates work can provide valuable insight.
Process of Tax Lien Certificate Sales:
- Public Auctions: Investors often bid on tax lien certificates at public auctions.
- Online Sales: Other areas conduct online sales.
- Here in the Kansas City Metro, these sales are generally in August and September.
Rights and Responsibilities of Certificate Holders: The certificate holder has the right to collect the unpaid taxes from the homeowner with interest and fees. If the homeowner fails to pay, the certificate holder may eventually foreclose on the property.
Benefits and Risks for Investors:
- Benefits: Investors earn interest on the amount they have paid and can potentially acquire the property at a low cost if the homeowner does not redeem it.
- Risks: There is a chance the homeowner will redeem the property, and the investor will only receive the interest payments.
Understanding Tax Foreclosure Sales
A tax foreclosure sale happens when a homeowner does not pay their taxes for an extended period. The local government can foreclose on the property to recover the unpaid amount.
Timeline and Process:
- Notices and Warnings: Homeowners receive notices and warnings before the foreclosure process begins.
- Redemption Period: There is usually a period during which homeowners can pay the overdue taxes to stop the foreclosure.
- Foreclosure Auction: Investors big at an auction on the property when the taxes remain unpaid.
Loss of Ownership:
- Loss of Property: When the property sells at a foreclosure auction, the homeowner loses ownership if they can’t redeem it.
When Certificates Are Bought
When an investor buys a tax lien certificate, the homeowner still has the chance to pay off the debt and stop foreclosure. This is known as the redemption period.
Redemption Period Details:
- Paying Off the Certificate: Homeowners can pay the owed amount plus interest to the certificate holder.
- Consequences of Non-Payment: If the homeowner doesn’t pay, the certificate holder can foreclose on the property, potentially leading to the loss of the home.
Redemption Period Length:
- The length of the redemption period varies by state, typically ranging from six months to three years.
How Tax Deed Sales Work
When a property is sold to recover unpaid taxes, it is a tax deed sale. Unlike lien certificates, deed sales transfer ownership of the property directly to the buyer.
Difference Between Lien Certificates and Deed Sales:
- Tax Lien Certificates: The investor holds a lien against the property.
- Tax Deed Sales: The buyer gains ownership of the property.
Process of Tax Deed Sales:
- Public Auction: Properties are sold at public auctions to the highest bidder.
- Clear Title: The buyer receives a clear title, free of mortgages and other liens. At least they are supposed to. However, here in Kansas City, those doing the foreclosure do not do it very well. So those purchasing property at the tax deed sale will quite often have to complete a quiet title action to clean up all those other mortgages and liens.
Options for Homeowners
If you are struggling to pay your taxes and have fallen behind, several options are available to help you manage your situation.
Paying Off Back Taxes or Lien Certificates:
- Payment Plans: Many local governments offer payment plans to help homeowners catch up on overdue taxes.
- Assistance Programs: Some programs provide financial assistance to help homeowners pay their taxes.
Selling Your House:
If paying off the debt isn’t feasible, selling your house might be the best option. At kcmoHomeBuyer, we offer a straightforward process to help homeowners sell their property quickly and easily. Visit our How It Works page to learn more and submit your property information to start the conversation.
Overages at the Sale
Sometimes, the winning bidder at the tax foreclosure pays more than what is owed. This overage should go to the home owner, but unless they apply for the overage, the county usually keeps it.
County-Specific Information
Understanding the specific processes in your county can help you take the right steps. Here are links to information for the five counties we serve:
Missouri:
- Cass County – Next Sale Monday, August 26th, 2024 at 10:00 am
- Clay County – Next Sale Monday, August 26th, 2024 at 10:00 am
- Jackson County – Independence Sale Should be August 12th-16th, Kansas City Sale Should be August 19th – 23rd.
- Platte County – Next Sale Monday August 26th, 2024 at 10:00 am
Kansas:
- Johnson County – No Sales Scheduled
- Wyandotte County – Next Sale Scheduled August 14th, 2024
These links provide details on the tax lien help process and upcoming sale dates.
How We Can Help
If you want to stop the process by paying the taxes, we can direct you to the county for information on payment options and plans. We also recommend seeking legal advice, as this process can be very complicated.
If you don’t have a way of paying the taxes and you want to sell your house, we can make an offer to purchase the home from you. At the time of closing we pay off the back taxes with penalties, any other mortgage or liens, and what ever is left over goes to you to money in your pocket.
Whether you aim to pay off your taxes and keep your home or consider selling your property, kcmoHomeBuyer is here to help. Contact us for more information and take the first step toward resolving your tax issues.
Additional Resources
- Missouri Property Tax Credit Claims for Seniors
- Kansas Homeowner Assistance Fund for Mortgages & Property Taxes
We hope this guide gives you the information you need to make informed decisions and seek assistance when necessary.
