Thursday, June 23, 2016
Although mortgage foreclosure filings continue in higher than historic norms in Maryland, another less-visible issue facing Maryland homeowners is tax sale foreclosure. According to the Pro Bono Resource Center, Prince George’s County, the state’s second largest county, saw 254 tax sale foreclosure filings in court in 2015, which was more than double than 2014, which saw 115 filings. Secondary foreclosure-related matters such as tax sale foreclosure therefore are a growing problem for Marylanders as homeowners slowly recover from financial challenges such as underemployment or medical emergencies.
A tax sale occurs when a homeowner is delinquent on property taxes or municipal liens (including unpaid water bills), and the county that the property resides in conducts an auction to sell a tax sale certificate for the property. Mortgage companies have traditionally paid off overdue property taxes to protect their interest in the property. However, Civil Justice has seen an increasing number of elderly homeowners who do not have mortgages falling behind on their property tax and water bill obligations due to financial hardship, triggering a tax sale foreclosure. As there is no mortgage company to pay off the delinquent amounts, the property goes to a tax sale auction. While the numbers of overall tax sales in Maryland may be low, tax sales affect a vulnerable demographic, with seniors on a limited fixed income particularly affected. Some seniors may have taken out a reverse mortgage, and may be unaware that they are still responsible for their property taxes.
The amounts and types of debts that can trigger a tax sale foreclosure varies from county to county – for instance, previously in Baltimore City, a tax sale could occur if a homeowner was delinquent $750 in property taxes (or other municipal liens) or $350 in water bills. However, due to the fact that this disproportionately affected low-income and elderly Baltimoreans, the Maryland legislature passed a bill in 2015 that raised the minimum amount owed that could trigger a tax sale to $750 across the board, regardless of whether the amount owed is for unpaid water bills, property taxes, or some other debt. In some counties a tax sale can occur for unpaid balances as low as $250, while in other counties unpaid water bills are not grounds for a tax sale.
It is important to note that if a property goes to a tax sale, Maryland law provides a process for redeeming the property. However, homeowners must act quickly to protect their rights and to avoid additional costs and fees. A lawsuit to foreclosure the right to redeem the property from tax sale case can be filed by the tax sale purchaser six months after the tax sale auction (and no later than two years from that date). Once the tax sale lawsuit is filed, the process moves quickly. It is important for the homeowner to pay off all outstanding amounts as soon as possible. If the amounts are not paid in full before an order foreclosing the right of redemption is signed by a judge, the homeowner loses ownership of the property.
Homeowners dealing with a tax sale foreclosure should seek assistance as soon as possible. Please contact Civil Justice at 410-706-0174 for referrals for free or reduced fee legal help. Depending on the situation, an attorney may be able to assist the homeowner with resolving any disputes about amounts owed and negotiating more time to pay off the obligation. Additionally, homeowners who are having difficulty paying their property taxes may be able to benefit from programs administered by the state of Maryland, including the Homeowners' Property Tax Credit and the Maryland Homestead Tax Credit. For more information about these programs, see http://dat.maryland.gov/realproperty/Pages/Homeowners'-Property-Tax-Credit-Program.aspx and http://dat.maryland.gov/realproperty/Pages/Maryland-Homestead-Tax-Credit.aspx.