Delinquent Property Taxes

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Property taxes are often paid through an escrow account established by the mortgage lender. This means that the borrower must pay additional funds for property taxes to the lender along with the principal and interest as part of the monthly payment. In recent years, many borrowers have found it difficult to keep up with their mortgage payments and, as a result, property taxes may go unpaid.

In other cases, homeowners are supposed to pay their property taxes separately from the mortgage. However, when faced with economic difficulties, they may decide to stop paying their property taxes. What happens when a homeowner is delinquent in paying property taxes? Read on to find out.

What Happens When Property Taxes are Delinquent?

All states have statutes that permit counties to place a lien on property with delinquent property taxes. Under most state laws, property tax liens are granted first lien status and are superior over other liens, including mortgages, regardless of whether the mortgage was recorded before or after the tax lien.



How to Save a Home if Property Taxes are Delinquent


  • Object to the assessments. State and local law will provide a procedure for a homeowner to challenge the amount of a tax assessment and reduce the tax liability. There are mainly two grounds to contest an assessment. First, the taxpayer can assert that the assessment exceeds the property’s taxable value, meaning its value has been assessed incorrectly. Second, the taxpayer can argue that the property has been disproportionately assessed, meaning that the assessment is higher than assessments of comparable properties in the area. Once the assessment has been reduced, the homeowner may have an easier time paying off the property tax debt.
  • Seek abatement, a deferral, or a compromise. Each state has exemptions and abatements that reduce at least a portion of the tax liability for some taxpayers. For example, tax liability may be reduced due to a taxpayer’s age, disability, income level, or personal status (such as the surviving spouse of a firefighter or police officer). Some states will also defer property taxes if the taxpayer proves they suffered a financial hardship. However, a deferral may not be available once the taxes have become delinquent. Alternatively, a defaulting taxpayer may be able to negotiate a lower liability with the taxing authority. The taxing authority may agree to waive penalties and interest or give the taxpayer additional time to pay off the delinquency.


Usually, a property will not go to tax sale if there is a mortgage outstanding on the home. This is because the lender will often advance amounts to pay the property taxes to ensure that their lien is not wiped out in a tax sale. Most mortgages contain a clause that allows the lender to then add these advanced amounts to the total debt that the borrower owes the lender.

When to Seek Counsel

The process for a tax sale varies from state to state. If you are facing a tax sale, you may want to consult with a competent attorney who can advise you of your rights as well as actions that can be taken to prevent the loss of your property. For help on finding and hiring an attorney, see our article on Hiring a Lawyer to Fight Your Foreclosure.