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Will an owner lose all property rights after a New York tax sale?

On Behalf of | Jul 14, 2023 | Residential Real Estate |

When someone falls behind on mortgage repayment obligations, their homeownership may be at risk. Failing to repay a mortgage per the terms of a lending contract can lead to foreclosure, a process by which a lender reclaims a home that serves as collateral for a home loan.

Unfortunately, missed mortgage payments are not the only concern that property owners who are struggling financially must keep in mind. Failing to pay property taxes can lead to a tax foreclosure, also known as a tax lien sale. When someone is delinquent on their property taxes, county authorities can eventually sell someone’s title for their home to a third party at an auction known as a tax lien sale.

New York property owners have the option of redemption

Although not every state allows for tax sale redemption, New York does. The party that purchases the property at a tax lien sale will not have full ownership rights until after the redemption period has passed. In New York, property owners generally have two years from the date of the initial tax sale to redeem their property. Some counties and municipalities offer a longer redemption period.

The redemption process involves not only paying the tax balance owed on the property but also paying interest to the party that purchased the real property at the tax auction. If a redemption occurs, the party that made the purchase at the tax sale will receive the interest paid as compensation. So long as the original owner is capable of paying the taxes owed, interest and any assessed fees in full, they’ll have up to 24 months after the tax sale to redeem their property and protect their ownership interest in it.

This rule has implications both for property owners who fall behind on their taxes and also for those thinking about purchasing properties at a tax lien auction. Accordingly, learning more about New York’s tax sale laws may help you to make more informed choices about maintaining or investing in real property.