A transfer of real property in exchange for money to satisfy charges imposed thereupon by the government that have remained unpaid after the legal period for their payment has expired.
Tax sales are authorized by state statutes to collect taxes that are long overdue to the state government from negligent or unwilling individuals.
Any sale of real property for delinquent taxes must be conducted in compliance with legally imposed requirements, or it is not valid. Ordinarily the tax collector is required to make and publish a list of property on which taxes have not been paid. Such a list must contain an adequate description of each parcel of land to be sold, the owner's name, the amount due, and the period of time for which the taxes are due. The interest permitted by law on the delinquent taxes, penalties for default in payment, and the costs incurred for the sale may be included in the amount due. Certain states mandate that this delinquency list must be filed or recorded in the office of the county clerk, and statutes may indicate specifically the newspapers in which the list is to be published.
The purpose of a notice of a tax sale is to warn the owner of the property that it will be sold and to furnish information to prospective buyers. Failure to provide notice to the owner renders any subsequent sale of the property invalid. This rule is consistent with due process requirements that any individual must be given notice and opportunity to defend himself or herself before being deprived of his or her property. The notice given to the owner must adequately describe the property, the amount of tax owed, and for what years it is due.
State statutes regulate the manner in which tax sales may be conducted. Ordinarily the sale is open to the public in order to ascertain that a fair price for the property will be obtained in the open market. A private sale is valid, however, when authorized by statute.
The general rule is that land offered at a tax sale must bring at least the total amount of taxes due on it, plus legal costs and charges. In some jurisdictions, a sale for a smaller amount is invalid.
In the event that the land is sold at the tax sale for a price that exceeds the amount owed, the sale might be valid, depending upon the state; however, the excess must be given to the delinquent taxpayer.
Any individual who is not disqualified by statute may purchase land at a tax sale provided he or she is the highest bidder. Upon payment of the amount bid, the buyer will be given a tax deed that serves as proof of his or her ownership of the property. Certain states mandate that a tax sale be confirmed in a court proceeding before the purchaser actually takes title or ownership to the property.
A state, county, municipal corporation, or other governmental unit may buy land sold at a tax sale only if authorized by statute.
The owner of property that is the subject of a tax sale is given a statutory right of redemption—that is, if, within a certain period, the owner pays the back taxes plus any other legal charges due, he or she will regain complete ownership of the property free of the prior tax debt. The public policy behind such a statute is to provide the taxpayer with every reasonable opportunity to redeem property since forfeiture of land has always been regarded as a drastic remedy. Generally any individual interested in the property sold for taxes is entitled to redeem it if his or her interest in the property will be affected by the purchaser taking complete ownership of the land, such as in the case of an individual who has a life estate in the property.
Redemption must occur within the time and in the manner specified by the statute.
Courts can proscribe a tax sale in cases where (1) a sale would be unlawful, so that the buyer's ownership of the land would be open to question; (2) the taxes have been paid; (3) the levy or assessment was unlawful or fraudulent; or (4) the valuation was grossly excessive.
Where errors or irregularities exist in the assessment that could have been rectified if promptly brought to the attention of the proper authorities, the tax sale will not be enjoined if such errors have no effect upon the substantial justice of the tax or the liability of the property for its satisfaction.
Lilienthal, Christopher. 2003. "Tax Sale Set Aside: Officials Failed to Examine Past Due Taxes: County and Township Tax Offices Failed to Use 'Common Sense Business Practices'." Pennsylvania Law Weekly (March 31).
Sacks, Michael E. 1998. "Escape Clause in Tax Sale Law Under Review by High Court." Pennsylvania Law Weekly (November 9).
Stone, Lin. 1998. How to Buy Land at Tax Sales. Ed. by James Criswell. Kansas City, Mo.: Truman.