How Does A Property Tax Auction Work?

If you’re facing the tax sale (sometimes referred to as a Sheriff Sale, though that can encompass other types of liens) of your home then continue reading. We will have valuable information that applies nationwide, but we will provide even more details and useful links for St. Louis, MO and surrounding area.

Why Is My Home Being Sold At Tax Auction?

Let’s face it, we have to pay lot of taxes – many of which are unnecessary and an unfair burden in my opinion. I personally do NOT believe in property tax and consider it theft, the county and city enforcing it adopt property tax as an important part of their budget. If you don’t pay your property taxes (or other municipal charges such as sewer), the past-due amount can become a lien on your home and can result in it being foreclosed, auctioned, or sold at Sheriff Sale. All states have laws that allow the local government to sell your home through a tax lien process to collect the delinquent taxes. This typically happens at the county level, but can also occur at the city level. In most of Missouri, the property must be 3 years delinquent before the house can be sold for back taxes.

How Does A Tax Auction Work?

How the tax sale of real estate works varies, depending on not only the state laws, but also what the local tax authority (typically the county) has enacted. In general there are two kinds of tax sales:

Tax Deed Sale:

With this type of sale the tax authority sells the deed to your house. The person (or more often, company) with the winning bid gets the actual deed and title to the property. This is often the case when it’s a tax foreclosure sale, which has no redemption period rights and will be discussed in more detail below.

Tax Certificate Sale:

With this type of property tax auction the winning bidder isn’t getting the deed to your property, but rather a certificate, which is essentially the tax lien on your property. This is often the case when there is a redemption period, which allows the home owner to redeem the property within a defined time frame.

With either case the process often starts with the local tax authority publishing a list of properties (as well as information about the owner) with delinquent taxes that are going to be sold at auction. This information is typically published in local newspapers and in today’s online world they also often publish them to the website of the tax authority. They will also often send a notice of the pending tax sale to the homeowner. After this is done the tax sale is held with the opening bid typically starting with the amount that covers the delinquent taxes, in addition to interest, and penalties.

I have talked to some home owners that had their home sold at tax auction and they tried reaching out to the people that bought it (the highest bidder). I have never heard of someone having success with this and if it does happen, it’s going to be rare. The thing to remember is that many of the houses sold at auction are sold to companies that have very deep pockets and will by dozens, or even hundreds of houses at auction in multiple states every year. If a company is doing this then it’s highly unlikely they’re going to work with the homeowner, but it doesn’t hurt to give a shot.

How To Save Your Home BEFORE A Tax Sale

Redeem by Paying The Taxes Due:

While it may be go without saying, it needs to be included and you don’t necessarily need to be the one to pay them. Keep in mind that a house facing a tax sale almost certainly doesn’t have a mortgage on it, because a bank will almost always foreclose before they let their asset be sold in a tax auction. In many cases paying the taxes yourself simply isn’t possible. If it were, the owner probably wouldn’t be in this situation in the first place. There are various ways to approach paying the tax arrears, including:

Cash Out Refinance – This is probably not an option for a couple reasons. 1) If a home owner can’t keep up with property taxes, what are the chances they can keep up with a mortgage payment on top of it? 2) You’re probably not going to find a lender to do a cash out refinance just to cover the taxes. Most banks require at least $50,000 on the mortgage to consider it worth their time.
Get a personal loan – This may not be possible or it just may not be a good idea in general. If there is a financial struggle it’s unlikely to not only be able to pay find a loan for this without collateral, such as the house itself. Do you really want to trade a tax foreclosure for a loan foreclosure?
Reverse Mortgage – I’m not going to dive into this much for this article, but essentially a reverse mortgage is where the lender makes monthly payments to the borrower (yep, you heard me right), in exchange for their equity.
Sell – Sometimes this is considered a last resort and sometimes it’s the first option on the table. Below are some things that would be important to consider when making this decision. Just be sure to look at them as objectively as possible, rather than making the decision out of pure emotion. I know that’s easier said than done, but it’s important to the decision making process.

Is the house important to you? Is there a strong attachment? Even if there is, we all have to face difficult decisions in life. What we feel and want aren’t necessarily the best choices. If they were, I would eat a lot more bacon and donuts.
Is the situation correctable? Another words, if the home owner is confident they can get back on track and continue to afford the house, there may be less desire to sell.
Is the owner able to care for themselves? This may seem like an odd one, but there are sometimes elderly home owners that may not be caring for themselves very well and may be better off where they can receive more help, such as a relative’s home.
Does the house still fit your needs? If you’re the only one living in a 2,000 square foot home, there may be a want, or even a need, to downsize.

Abatement:

Your tax authority may have a process for inquiring about abatement, which can result in the delinquent taxes being forgiven in part or whole. At the end of the day it certainly doesn’t hurt to pay a visit or call the county/city and ask if this is an option. Some of the more common reasons abatement is granted include:

A property is going through probate and it’s being contested or the rightful owner is not yet known.
A significant illness, such as an elderly home owner with dementia
All income is used for basic living expenses and have nothing left over to pay property taxes. Keep in mind if there are statutes for this, it’s typically only going to be for the elderly and disabled.

Challenge The Tax Assessment:

This probably isn’t going to be allowed if you’re house has already been slated for tax sale, but it’s worth exploring. This is also likely to be an uphill battle. The taxing authority doesn’t want to concede and set the stage for more challenges and their budget had already been based on the assessment. You would need to provide proof that it’s inflated. You may want to talk to a third-party appraiser in your area and see if they can help.

Payment Plan With Taxing Authority:

Some jurisdictions actually have payment plans that will sometimes delay the tax sale under certain circumstances.

Tax Foreclosure and Redemption Period

In general, a tax foreclosure will involve a tax deed sale. A tax foreclosure typically means that once the property sells at tax auction, the winning bidder has the right, which is usually exercised, to immediately foreclose on the home, which results in you losing ownership. Most of Missouri has redemption rights, though there are a few exceptions to this, with St. Louis City being one of them. A redemption period allows a homeowner a certain amount of time (typically 1 year in Missouri) to pay the taxes owed, in addition to interest, fees, and penalties. For most tax authorities (typically the county) in Missouri, there is a one year redemption period. St. Louis City (not county) is one of the few tax authorities in Missouri that do a tax deed sale, which does NOT have a redemption period.

How To Save Your Home AFTER A Tax Sale

Even if your home is sold for delinquent taxes, you may be able to take back ownership. We will discuss some of the options below.

Redemption Period:

As discussed above, if there are laws providing the home owner (or successors/heirs) a period of time to redeem their property after a sale, it will typically involve paying the taxes owed, in addition to interest, fees, and penalties. When redeeming you will typically need to fill out a redemption form, which will detail the amount that needs to be paid and the deadline of paying it.

Challenge The Validity Of The Tax Sale:

This is known as setting aside the sale, which means you are claiming the sale was invalid and did not occur within the bounds of the law. In some cases It is not common for this to happen and it’s likely to be difficult to win this argument. It would be a good idea to consult with an attorney in these cases.

Whether you’re facing the tax sale of your home or it already sold and you’re in redemption, we can help. We’re proud to have the knowledge and opportunity to help solve real estate problems in the St. Louis region. Even if you don’t want to buy or sell and just have questions regarding a challenge your facing with your home, give us a call. We’ll gladly offer any advice we may have. No pressure. No judgment. No obligation. No cost.

Missouri Tax Sale Resources

Saint Louis County Collector of Revenue (https://www.stlouisco.com/YourGovernment/CountyDepartments/Revenue/CollectorOfRevenue) – The Collector of Revenue is who you will want to get in contact with regarding redeeming your home if it sold at tax auction.

Saint Charles County Collector of Revenue () – https://www.sccmo.org/283/Tax-Sale-Information

Saint Louis City Sheriff (https://www.stlouis-mo.gov/government/departments/sheriff/land-tax-sales.cfm) – They handle the land tax sales in the city. Remember, at the time of this writing there is no redeeming in St. Louis City: once the house is sold at tax sale (held 5 times a year), the property is gone.