Tax Lien Foreclosure

What is the Tax Lien Foreclosure?

If you don’t pay your real estate taxes the County has several options to collect the money, including foreclosing on your home, or selling the tax debt, called a tax lien in Ohio, to get the money you owe “up front” from a third party.  

Tax lien foreclosure in Ohio is on the rise, as many homeowners struggle with mortgage payments they cannot make, and tax payments that are too much for their budget.  While mortgages can be put into forbearance plans for up to a year, there are only limited programs for real estate tax delinquencies, and once a tax lien on your home has been sold, your options are even fewer.

Debt buyers, such as Tax Ease and FIG as Custodian for FIG OH18 LLC, buy these tax liens so that they can collect the amount due, plus interest at 18%.  Liens are good for 40 years, and need only be refiled every 15 years. 

This is a really great return on investment, for them, and the tax lien buyers are virtually sure of getting their money out of you, or the sale of your property.  

You should consider the sale of a tax lien in Ohio on your property a very real threat to your home.

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How do Tax Liens and Tax Lien Foreclosures in Ohio work?

Ohio Revised Code sections 5721.30 to 5721.43 allow the County Treasurer where your home is located to collect delinquent real property taxes by selling tax liens.  These liens are sold for the entire amount due as of a certain date.  You should be aware that taxes continue to accrue on your home after the sale of the tax lien.  So, if you can find a way to pay the full amount due on the tax lien, plus 18% interest, you will still probably have a tax delinquency due.

Any property is eligible for a tax lien sale.  However, there are steps the county has to take in order to sell a tax lien in Ohio on your home.  Before a tax lien on your home can be sold, you are supposed to be sent at least three tax bills, giving you a chance to pay the taxes current.  If you don’t pay, you will normally get several notices about your delinquent taxes.

If you still don’t pay, then the county can set the tax debt for a tax lien sale in Ohio, which will include your name, property address, and other information about the upcoming certificate sale.

You will also normally receive an additional warning.  The county is trying to get you to pay the tax, rather than sell your tax debt.  Before a tax lien is sold, you may be able to enter into a payment plan with the county. 

If you can get into a payment plan, there will be no tax lien sale and you will be given an opportunity to pay the taxes over time, typically a year.  If your taxes are not paid in full or if a payment plan is not kept up, then you will get a certified letter warning you of the sale of your tax lien.

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Useful Calculators

Here are two helpful calculators for managing your debt repayments and Chapter 13 commitments.

When you owe real estate taxes and do not pay on time, the County Treasurer’s Office can sell the past due taxes you owe to a third parties.  They then can collect the past due taxes from you directly, or later they can foreclose on your home to collect the tax.  The tax liens carry a hefty 18% interest rate.

If you don’t pay your real estate taxes on time or get into and keep a payment plan with the county, they will eventually list your tax debt for sale, or they can foreclose on you directly.  The direct foreclosure process is another option the county has to collect taxes owed, and they are opting for direct foreclosure more now that the real estate values have increased.

You will owe not only past due taxes, but also fees, penalties, and interest.  This entire debt is sold in what is called a Tax Lien Sale in Ohio.  These tax liens are sold in “bundles” and CANNOT be bought individually.

The tax lien buyer cannot immediately foreclose on your home.  They have to wait twelve (12) months after the date of the sale of the lien before they are allowed to foreclose.  If you don’t to pay the full amount owed on the lien, then the purchaser of the lien has the option to foreclose on the property.

In order to know exactly how much you owe, you need to call your local county treasurer’s office. 

Not necessarily.  Before a lien on your past due taxes is sold, you have several options.  Obviously, you have the right to pay the tax in full.  You MAY also be able to enter into a payment plan for your taxes. 

Finally, the option that they will NOT tell you about your right to put all the taxes, and other debt you owe, into a Chapter 13 bankruptcy, which will give you up to 5 years to catch up your taxes.  For many, this is the ONLY option that will save their homes.  In fact, Chapter 13 could allow you to wipe out ALL your other unsecured debt, freeing up money you need to pay the back taxes. 

Note that after the sale there are usually additional fees and interest charged against your property. 

Finally, if you can’t pay the taxes and all penalties and costs in full within twelve (12) months of the date your lien is sold, your home can be sold a tax lien foreclosure sale.   You will then lose your home and may still owe thousands on your mortgage if you have one, unless the sale price is enough to cover that debt as well.

NO! Properties with tax liens sold still owe real estate taxes every year. 

You are required to pay BOTH the tax lien as well as pay current taxes during regular payment periods. 

And, if you don’t pay your ongoing taxes as they come due, a second lien CAN be sold on additional unpaid real estate taxes.  Additional fees and penalties will be charged for a second lien.

This normally does not happen, though, as you will typically have lost your home before the second tax lien is sold.

Although any qualified buyer can purchase a tax lien, commonly they are bought by companies set up to buy them for investment purposes.  In Ohio, tax liens are purchased by companies like Tax Ease and FIG as Custodian for FIG OH18 LLC.

Tax liens are sold in bundles, or groups.  If your tax lien is sold, you will receive notice by certified mail of the purchaser so you can attempt to make payment arrangements.

If you can’t pay the taxes or make an agreement to do so that you can afford, the county will foreclose directly or sell your tax lien. 

You have the right to file bankruptcy to catch up the missed payments.  Because the tax is a lien on your property, you cannot get rid of the debt, or discharge it, in bankruptcy.  However, the chapter 13 bankruptcy option lets you discharge other debts and get more time to pay the taxes back than the county or the tax lien buyer will normally agree to.  Chapter 13 can save your home when no other option will work.

Simple.  They need the money.  The pandemic has hurt local governments as well as private citizens.  The economic downturn has forced county treasurers to do everything in their power that they legally can do, including foreclosing on real estate and selling tax liens to get the tax dollars they need.