There are things in real estate that can ruin your day too, in the sense that they can harm you financially before you ever see them coming.
One such thing is a tax lien. If you have a mortgage and your monthly payment includes an escrow for taxes, you rarely have to worry about a tax lien. Even if you fail to pay your mortgage, your bank will make sure the property taxes are paid. That's because past due taxes get paid even ahead of a first mortgage, and your bank doesn't want anyone in line ahead of it to get paid out of your hide.
Some mortgages are set up in a way that requires you to pay real estate taxes on your own. This is also your responsibility if you have no mortgage. In New York City we pay our property taxes every three months. Elsewhere it might be once or twice a year.
If you don't pay your property taxes on time, they become a lien on your property. The same is true of water bills and some other charges. These liens are then sold to outside companies that specialize in collecting the money. The tax lien buyer adds more fees and interest to your debt, and before you know it, your tax bill is high enough to ruin your day.
You can’t tell if this has happened simply by looking up your tax account online. The city will show a zero balance, because the city got paid by the tax lien buyer.
The city government is supposed to send you multiple notices of its intention to sell your tax lien, to give you an opportunity to pay up. But it you don’t ever see these notices, you might not know your tax lien has been sold until you get served with tax lien foreclosure papers.
The Center for NYC Neighborhoods has a web-based tool to give you an idea of how widespread tax lien sales are in various neighborhoods. Check it out at http://cnycn.org/taxliensale/.
Don’t let tax liens or unpaid property taxes ruin your day. For more information, call us.