How Communities Benefit
Tax Sales Help Local & State Governments
Tax sales finance local and state governments services such as fire, police and 911 services, infrastructure needs, and school districts and libraries when cash shortfalls occur due to unpaid property taxes. The delinquent property tax accounts are very real problems for local governments that must provide critical services to their citizens.
It is widely misunderstood that tax lien sales cause property owners to lose their homes to investors. The opposite is true; tax sales actually extend the period for which property owners can save their property. Without tax lien sales, local governments would need to charge higher interest rates on delinquent accounts and move them to foreclosure faster. Instead, through tax sales the local governments get the cash they need immediately and there exists a prolonged stay against foreclosure to allow property owners to get caught up.
The reality is that very few occupied homes are lost through tax sales. The cost to redeem the tax liens is low relative to the value of most homes, so lenders often redeem the property or home owners sell before all is lost. The vast majority of properties acquired through tax sales are vacant land, vacant homes, and vacant commercial property. This is another way in which tax sales help communities; investors in tax liens rehabilitate dilapidated properties acquired through tax sales. This stabilizes neighborhoods and strengthens tax rolls.
In summary, tax sales provide interim financing for local governments, extended redemption period for delinquent property owners, and rehabilitate dilapidated properties. The real question is why isn’t every local government selling tax liens?
10/8/2015 » 10/9/2015
2015 NTLA Fall Symposium
Executive Director's Blog