What is a Tax Sale?
Tax sales are used by the County Treasurer to collect unpaid and delinquent real estate taxes. The tax sale is generally held on the third Monday of June every year. At the sale, the County Treasurer offers for sale each parcel with delinquent taxes for the total amount of taxes, interest, fees, and costs due against each parcel. While this article examines the procedure of the regular tax sale, you should note that there may be different requirements for the public bidder and public nuisance tax sales.
When Can a Parcel be Sold at the Tax Sale?
A parcel is sold at the tax sale if the owner does not pay the property taxes. Property taxes are due in two annual installments, the first one-half being due by September 1 and the second one-half being due by the following March 1 (for example, the upcoming installments will be due September 1, 2024 and March 1, 2025). Property taxes become delinquent if not paid by October 1 and April 1, respectively. If property taxes are not paid by April 1, the County Treasurer will then serve the owner with notice of the delinquency by May 1, which includes the time and place of the tax sale.
What Happens at a Tax Sale?
The successful bidder who offers to pay the total amount due on any parcel at the tax sale is known as the tax sale purchaser. The purchaser receives a certificate of purchase from the County Treasurer, which is good for 3 years from the date of the tax sale. The certificate of purchase provides the purchaser with a lien interest against the parcel.
How to Redeem?
After a parcel is sold at the tax sale, any person with any kind of legal or equitable interest in the parcel may redeem the parcel any time prior to the expiration of the right of redemption. Redemption is completed by paying the County Treasurer the amount for which the parcel was sold, including any fees and interest. A person who wants to redeem should call their County Treasurer to obtain the exact amount due for redemption.
When Does the Right to Redeem Expire?
The tax sale purchaser (or certificate holder) must serve notice of expiration of right of redemption to all interested persons as defined in the Iowa Code. The notice can generally be sent one year and nine months from the date of the tax sale. The notice must state that the right of redemption will expire, and a tax sale deed will be issued unless redemption is completed within 90 days from the date of completed service of the notice.
What Happens if the Parcel is not Redeemed?
If redemption is not timely made, the tax sale purchaser (or certificate holder) is entitled to receive a tax sale deed for the parcel from the County Treasurer. The tax sale deed vests in the purchaser all of the right, title, interest, and claim of the state and county to the parcel, and all right, title, interest, and estate of the former owner to the parcel. A tax sale deed creates a new and independent title in the purchaser and extinguishes prior claims against the land but remains subject to certain restrictive covenants and subsequent tax sale certificate holders.
If you have any questions or concerns about your property being sold at a tax sale or if you have questions about a property you purchased at a tax sale, please contact Katie Tegtmeier or your BrownWinick attorney. Special thank you to summer clerk Grace Kruse for her assistance with this blog.
