Chevy Chase, MD asked in Foreclosure, Real Estate Law and Tax Law for Maryland

Q: Is it illegal to pursue a tax delinquent property owner for the sale of their house if the foreclosure wasn't filed?

As a real estate investor, I target tax delinquent properties. those who are behind on their property taxes. From what I know there is a default time where the home owner goes behind on the property taxes and then I believe it goes to auction and you have to bid for them? I want to pursue the homeowners myself. do I need to find the tax delinquents before the county files a lien/auction date?

1 Lawyer Answer

Cedulie Renee Laumann

Answered
  • Crownsville, MD
  • Licensed in Maryland

A: You essentially ask about tax sales. Each county has different dates and specific process for the sales/bidding, but in Maryland if the taxes are ~6 months or so past due, the county holds an auction. The county will advertise the auction in advance. The property owner can pay up the taxes, in which case it won't go to tax sale and the record owner will keep their ownership. If it does go to tax sale, an investor can bid on the property. The winning bidder receives a tax sale certificate.

The tax sale purchaser must wait several months after the tax sale before commencing suit to foreclose the right of redemption.

Even then, the homeowner has the absolute right to redeem their property anytime before the judge issues the final order by paying the back taxes and the statutory expenses. However, some of the expenses are not authorized until 2 months after the tax sale has concluded.

If the homeowner does not redeem the property before the judge issues the final order the tax sale purchaser may obtain title to the property in the tax sale case. In that case the county then deeds the property over.

If a homeowner doesn't have money to pay property taxes due to low income, then it is highly advisable for them to file an application for a homeowner tax credit. This can be filed before May 1 or Sept 1.

The law tries to balance the need to collect tax revenue without harshly yanking the rug out from under a homeowner's feet so to speak without warning.

Naturally if someone wants to sell their home for what they feel is fair market value, they are free to do so. Any and all liens must be paid off before the transfer, and that would include taxes, mortgage liens, judgments, etc. Some laws were enacted out of concerns that investors might try to take advantage of a homeowner in financial distress / facing foreclosure -- Maryland enacted the Protection of Homeowners in Foreclosure Law (PHIFA) which has various rules restricting investors privately approaching homeowners in foreclosure to buy their home. That law may or may not apply to a homeowner behind on their taxes.

As with any legal endeavor, it would be prudent to seek legal advice.

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