Tax Sale Complaints

Foreclosing rights of redemption 

(after the county auctions at tax sale)

Typical MD Tax Sale Time frame:

  • September / December: Annual property Taxes Due
  • May or June (about 1/2 year after the taxes were due):  County holds a Tax Sale Auction for properties with unpaid taxes.  People interesting in bidding must typically register and get a bidder number in advance. On day of tax sale, individuals and businesses bid on properties.  The winning bidder gets a certificate and is also known as a certificate holder. 
  • 4-20 months after tax sale the certificate holder / purchaser can start the legal process.  The purchaser can also be reimbursed for legal fees and expenses at this point. A series of detailed notices must be mailed to the record owner.  If the tax sale purchaser waits more than 22 months they may be time barred from filing suit and the certificate will become void.
  • 2 months after required notice (no earlier than 6 months after tax sale)  the certificate holder / purchaser can file suit in Circuit Court to turn over the property if the record owner doesn't pay the taxes (and whatever interest / fees have accrued).
  • After serving the record owner(s) with court papers, the purchaser can ask the court to foreclose the owner's right of redemption.  Note that the owner can redeem their property by paying back taxes and fees up until the judge signs off on the order.
  • After the court/judge signs off, the purchaser can get a Deed to the property.  They will need to pay the balance of any Bid Price to the county as well as any outstanding taxes.  If the purchaser bid higher than the taxes and fees, the owner (or the mortgage company) is entitled to the excess bid price.   

What is Tax Sale? 

When nobody pays the real estate taxes, Maryland law provides a mechanism for each county to sell these unpaid accounts at tax sale auction.  These typically occur about six months after the taxes are due.  (For instance, if property taxes were due by December of one year, the tax sale auction might take place in May or June of the following year). 

What are the redemption rights in tax sale? 

The record owner can still get their property back (redeem) after tax sale by paying the back owed taxes and fees any time up until the court "forecloses the right of redemption" or in layman's terms, legally blocks the chance of the original owner paying back the taxes to keep the property. Many people buy at tax sale because of the high interest rates (attractive to investors, not so attractive to the property owners struggling to pay taxes in the first place!)  Oftentimes if the property is encumbered by a mortgage the lender will pay the taxes to avoid losing its interest.

What happens when nobody pays the back taxes? 

Sometimes no one steps forward to pay off the taxes and fees.  After a Tax Sale, the winning bidder may file a lawsuit, called a Foreclosure Action in Circuit Court to stop the record owner's rights Foreclose the Rights of Redemption.  In essence, the tax sale purchaser has the right to get the property if no one pays up.  The purchaser can buy by tendering the full price bid at the tax sale.  If there is more money bid than taxes and fees owed, the record owner (or mortgage company) gets the surplus.  

If the property is not redeemed, the tax sale purchaser must go through court to get title.   Maryland law gives very specific time frames and procedures.   For instance, the purchaser must wait a minimum of six months but no more than 2 years after the tax sale to file this type of proceeding.  The 2 year time frame can be deceiving, however, since an investor who waits til the end of the 2 years may find themselves without remedy because the law also specifies a series of notices that must be served before the court case can be filed.

Legal representation for tax sale buyers / certificate holders

Arden Law Firm assists tax sale purchasers with these types of cases, generally for a flat fee, in Anne Arundel, Prince George's Counties and other Maryland counties.  At this time no representation is offered for Baltimore City tax sales.  Volume discounts (to file multiple complaints at the same time, same county) are available.  

Do I need an attorney as a tax sale purchaser?  How much do legal fees cost?  Any business entity purchasing at tax sale must be represented by counsel if they wish to file a complaint to foreclose the right of redemption.  Because the law allows for reimbursement of legal expenses so that the tax sale purchaser gets either reimbursed (up to statutory limits) or gets the property, it almost always makes sense to hire counsel.  

Should I invest in tax sales?

Tax sales in Maryland have a set interest rate which is usually far higher than any bank rate -- for instance, 12% or 18%.  Competition for tax sales may be highly competitive.  Although there is a legal right to seek the property if the owner doesn't pay many tax sale purchasers are not interested in kicking people out of their homes and primarily want the interest.   In some unusual cases, a tax sale might be voided in which case the purchaser would typically get a refund but no interest. 

Taxes too high?  Government relief options:

Property taxes can be a frustrating expense of owning real estate - they occur year after year and are generally imposed based on the property value regardless of income.   Maryland currently offers a few programs for tax bill relief - note that in most cases an application must be filed BEFORE the tax bill becomes due (typically before September 1 to get credit before a Sept 30 bill).  

Homestead Tax Credit -- This credit requires a one-time application and limits or caps any INCREASE in property taxes by no more than 10% per year for a principal residence. Some counties further curtail the increase to a more modest 2% per year.       

Homeowner's Tax Credit / Income Based Assistance -- Marylanders whose total (gross) income is below $60,000 may have their property taxes capped by filing an application before September 1st of each year.  (filing before May 1st is preferred).  Financial records, including tax returns, may need to be submitted with the application.      

100% Disabled Veterans -- Maryland exempts disabled veterans (and their surviving spouses) from property taxes.  

© ArdenLawFirm 2014-2018  Managing Attorney Cedulie Laumann, Esq.