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When a property owner does not pay his due against the property tax that he is liable, the government can place a lien against the property for unpaid income taxes. This can happen at both the Federal level and state level, depending on whether the owner lives in a state that collects state income tax.
Delinquent charges can arise if the owner has not paid property taxes, sewer or water charges, surcharges, sidewalk repairs, or vacant lot cleaning charges and other property-related municipal fees and charges. To attend to such delinquency, all 50 states offer different schemes. Some state offer public auctions against such properties in form of a tax deed or tax lien certificate.
Property can still be put up on auction even if the owner is in the process of disputing the tax or charge. However, this sale can only be permitted if all delinquent property taxes remain unpaid for the legally specified amount of time. To avoid a tax lien, you should pay all the charges on your property. If you wish to contest the charges, you should still pay the full amount, and if you win your case you can always get a refund.
Within 90 days of the lien sale date, the city notifies all property owners by mail about the details regarding the sale. Information about the terms and conditions under which the lien was sold, the name of the new lien holder, and the name of the lien holders authorized representative whom the property owner should contact. Also the said representative gets in touch with the property owner to confer payment arrangements. After such an auction, the property owner is advised not deal with, or make payments to, anyone other than the new lien holder.
After such a sale, the property owner then owes the required amount of taxes and administrative charges to lien holder and not to the government. But mind you, the total amount now owned increases, as the lien holder is entitled to receive certain decided amount of surcharge and interest at an agreed rate of calculation.
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