What should you do to 'redeem' your property and save it from tax sale foreclosure?
Each year, the District of Columbia holds an auction to sell past-due tax debt. The companies that offer the highest bid at auction — the “tax sale buyers” — can file a lawsuit to foreclose on the property in order to collect the past-due taxes. If a property owner does not act, he or she may lose their entire home to the tax sale buyer because of tax debts as low as $1,000 or less.
If your home was included in a tax sale:
- Act quickly. It is to your benefit to redeem your property as quickly as possible. The unpaid taxes will accumulate interest at 1.5 percent per month (equal to 18 percent per year), and after an initial six-month grace period, you may be required to also pay the fees and costs for the tax sale buyer’s attorney. These attorneys’ fees could add thousands of dollars to the amount you must pay to redeem your home.
- Ask the D.C. Office of Tax and Revenue for the redemption payoff amount for your property. Be sure to tell the OTR representative that you want to redeem your property from tax sale and that you need the most current real property tax bill.
- Be sure to get a receipt as proof that you made your redemption payment (or payments) and keep it with your important records.
- Follow up with OTR to confirm that your payment has been applied to your account and your property has been redeemed.
- If a foreclosure suit has been filed against you, be sure to attend court for any hearings in your case. The paperwork about the lawsuit should inform you of when the hearing(s) will be held.
- Know your rights if OTR or the tax sale buyer’s attorney informs you that you must pay for attorneys’ fees or costs:
* You are not liable for any attorneys’ fees or costs for the first four months after the yearly tax sale, and you may only be asked to pay a limited amount (usually less than $350) during the time after the four months have expired but before a foreclosure lawsuit is filed. If you paid your taxes before the suit was filed and you think you are being wrongly charged attorneys’ fees, you should contact LCE, consult with an attorney at the Tax Sale Resource Center, or inform the judge in your tax sale case.
* The law requires that the fees and costs charged by the tax sale buyer’s attorneys must be “reasonable.” If you believe the fee amount sought by the buyer’s attorney is not reasonable, you can ask the judge to help ensure that the attorneys’ fees are fair and reasonable.
For more information about the tax sale process, read OTR’s Real Property Owner’s Guide to the Tax Sale Redemption Process.
It is important to start working to redeem your property as soon as you learn it is subject to tax sale (or has already been sold). But even if you have received notice of a tax sale foreclosure suit, it is not too late to act to save your home.