Can you lose your home if you don’t pay property taxes on time?
Dear Mr. Feichthaler:
I am really worried! My husband recently had significant medical issues, which led us to have financial issues, too. We normally pay our property taxes in November to get the largest discount. This year, we could not even pay prior to the April 30th deadline. We received a letter from the Tax Collector saying a tax certificate will be sold if we don’t pay in a few weeks. Could we lose our house if we don’t pay it? What can we do?
-Lily D
Dear Lily,
I am sorry to hear about your family’s recent health and financial issues. With so many demands for your money, it is understandable that you weren’t able to pay property taxes. If you are unable to pay the taxes within the next few weeks, you are correct that the opportunity to pay your taxes will be put up for auction. Thousands of investors enroll in the annual tax certificate sale every year, in the hopes of obtaining better returns than they can otherwise. The bidding occurs in reverse order, with the first bidder offering to pay the taxes, in exchange for the maximum interest rate of 18 percent. Other bidders can then bid lower interest rates, until the lowest offer is accepted. It should be noted that, if someone bid 0 percent, then they would not receive any return on their investment. However, even if the winning bid is 1/4 percent, the minimum return to that investor is 5 percent per year.
So, if someone pays your taxes on your behalf, and the bid is 18 percent, that person will be entitled to 18 percent per year on the amount paid until the tax certificate is paid off. If the tax certificate is not paid off in two years, the tax certificate holder has the option to apply for the tax deed, which will potentially force the sale of your property at auction. The tax certificate holder would be paid with the proceeds from the sale. It should be noted that, if the tax certificate holder takes no action and seven years pass, the certificate will no longer be valid.
Especially given the potential for a very high interest rate, it is likely in your best interests to pay the taxes due as soon as possible. If you decide to sell your home, the taxes would be paid from the proceeds of the sale. Keep in mind that, although the Florida Homestead protects homeowners from nearly all unsecured creditors, state and local taxes are an exception. If you are unsure on how to proceed, you may wish to seek professional counsel.
Eric P. Feichthaler has lived in Cape Coral for 28 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through his chairmanship of the Harney Point Kiwanis Club KidsFest, which provides a free day of fun and learning to thousands of Cape Coral families, and funds numerous scholarships. He has been married to his wife, Mary, for 14 years, and they have four children together. Recently, he earned his board certification in Real Estate Law from the Florida Bar. He is also a Supreme Court Certified Circuit Civil Mediator.
This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.