Recently, a client at our firm was notified that his property had been sold at a tax sale. The client told us that he had never been notified of any tax owed on the property. It was only after he inquired at the county Auditor’s Office that he discovered his property had actually been sold over twelve months ago. To make matters worse, the client had invested a lot of money and sweat equity into the property in the hopes of one day renting the house. While he should have been more proactive in discovering his tax obligations on his real property, the lack of notice was possibly going to save him from losing his property. Whether you recently lost your home or investment property at a tax sale, or purchased property at tax sale, Indiana statutes have a lot to say about the process and procedure for buying or redeeming a property at a tax sale.
Our client’s problem started with the county Recorder’s Office. Their records were showing that our client’s deed to the property was never actually recorded. Fortunately, a title search showed that the deed had actually been recorded. If our client’s deed had shown up in the county Recorder’s Office’s records, it is more likely that he would have been notified of an impending tax sale early in the process instead of after-the-fact. Lesson: Be sure to record your deeds and retain a copy for your records!
Indiana Code Section 6-1.1-25 outlines the rules for notifying homeowners of an impending tax sale on their property. This statute also details the process for a homeowner attempting to “redeem” their property, either before or after the property is sold at a tax sale. Under the statute, the important deadline to keep in mind is a 12-month period after the property is sold (known as the “redemption period”), whereby the homeowner can “redeem” his property by paying the unpaid taxes and following a few other procedures. It is important to remember that after this 12-month period, redemption is no longer a direct option for the homeowner.
Attention real estate investors buying property at a tax sale: You must follow these same rules! The statute requires tax sale purchasers to request and record what is called a “tax certificate.” The tax certificate must be recorded within a certain time in order to properly give notice to the homeowner and eventually gain title to the property. If the tax certificate and deed are not timely recorded, then the purchaser may end up with a lien on the property worth a percentage that is more than the actual property tax owed at the time of sale.
If you have recently lost your home or investment property to a tax sale or have recently purchased a property at a tax sale, be sure to contact an Indiana real estate attorney to ensure you are informed and in compliance with Indiana laws relating to tax sale transactions.