In aviation, sometimes you hear
about events that can "ruin your day", like running out of fuel in
mid-flight, or hitting a mountainside because you are flying in the clouds and
you are below your assigned altitude. It's a euphemism for anything that can harm
you or your airplane.
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.
