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Securing Your Property Rights: How Attorneys Navigate Tax Lien Foreclosures

August 23, 2023

Property ownership comes with responsibilities, including paying property taxes to support essential community services. However, life’s challenges can sometimes lead to unpaid taxes, resulting in the possibility of tax lien foreclosures.

Understanding Tax Lien Foreclosures:

Tax lien foreclosures occur when property owners fail to pay their property taxes, prompting the government to place a “lien” on the property—a claim against it due to unpaid taxes. In situations where taxes remain unpaid, the government can proceed with foreclosure, taking ownership of the property and selling it to cover the overdue taxes. This mechanism ensures that the government collects the funds it’s owed while creating opportunities for investors to purchase properties.

The Crucial Role of Attorneys:

  1. Legal Advice and Representation: Facing a tax lien foreclosure can be overwhelming, but our attorneys are here to guide you. We’ll help you understand your rights, explain the foreclosure process, and develop strategies to address your situation. Should legal proceedings arise, we’ll be your advocates, ensuring your best interests are represented.
  2. Negotiations and Resolutions: Our legal team negotiates with government agencies on your behalf, working towards potential resolutions or payment plans that help satisfy unpaid taxes and prevent foreclosure. We explore options to help you catch up on your payments or obtain bankruptcy protection, safeguarding your property.
  3. Defending Against Foreclosure: If your case reaches court, an attorney can assist in helping to understand the legal process and a homeowner’s rights.
  4. Due Diligence for Buyers: For those interested in purchasing properties at tax lien auctions, we conduct thorough title research and due diligence to ensure that no hidden legal issues are associated with the property. We guide you through the auction process, providing a smooth and legal transaction. We also assist with holdover occupants.
  5. Reclaiming Your Property: If your property has been auctioned, we assist you in understanding redemption rights available in some jurisdictions. This process allows you to regain ownership by paying the overdue taxes and costs, ultimately repossessing your property.

Recent Supreme Court Decision:

A recent landmark Supreme Court decision in Tyler v. Hennepin County, Minnesota, has far-reaching implications for tax lien foreclosures. This unanimous (9-0) decision found that allowing government entities to keep surplus funds collected from auctions exceeding the amount owed in taxes violates the Fifth Amendment’s Takings Clause. This ruling, supported by historical precedent, ensures that surplus funds rightfully belong to former property owners.

Looking Ahead:

This decision is set to influence how surplus funds are managed in tax lien foreclosures across various states, including New York. A proposed bill in New York State, Senate Bill 7514, aims to ensure the fair distribution of surplus funds and provides notice to former property owners about the existence of any surplus. So, more is to come on this topic and the Supreme Court Decision.

Contact us if you have a tax foreclosure issue you need help with.