Dear Mr. Azrael:
My questions pertain to tax liens on real property. If the taxes remain unpaid and the lien is foreclosed by the taxing unit and the property is sold to satisfy the taxing unit's claim for taxes, what is the time allowed for persons paying the tax liens to acquire the real property? Also, can an interest rate of 9 percent be imposed on the persons to whom property is listed for taxes?
Herbert M. McDowell
Dear Mr. McDowell:
When property tax is not paid, the tax collector in the local jurisdiction is required to sell the property at a tax sale. The Maryland Code establishes the procedures for conducting tax sales.
These procedures include notice by mail to the person who last appears as owner of the property on the tax rolls, as well as advertising in newspapers of general circulation in the county in which the property is located.
Tax sales are made by public auction to the highest bidder. The successful bidder does not acquire immediate ownership of the property. The high bidder receives a "certificate of sale." The holder of a tax sale certificate is entitled to file a legal action to foreclose (wipe out) the rights of the legal owner and all others who have an interest in the property. This legal action is called a "foreclosure of the rights of redemption."
When no private purchaser buys in a tax sale, the county or taxing agency must buy the tax sale certificate, except in Baltimore City, where the mayor and City Council are not required to buy abandoned properties.
In general, the holder of a tax sale certificate may file a court action to foreclose the rights of redemption at any time after six months from the date of the sale, but not later than two years from the date of the certificate of sale. In Baltimore City, an action to foreclose the right of redemption for abandoned property must be filed within three months of the date of the certificate of sale. If a foreclosure action is not instituted within these time frames, the tax sale certificate is void, and the purchaser loses the money paid at the tax sale.
The property owner or other person who owns an interest in a property sold at tax sale may redeem the property at any time until a court has issued a final order foreclosing the right of redemption. The redemption price will include the price paid at the tax sale for the property, together with interest at a rate established by the taxing jurisdiction, plus additional taxes accruing since the tax sale and other expenses and fees authorized by law.
In Baltimore City, the interest rate currently allowed on tax sale redemptions is 18 percent per annum. Other jurisdictions have authorized different interest rates.
A private purchaser at tax sale has no right to recover taxes or interest from the property owner, unless the owner redeems the property. However, within seven years from the date a tax is due, the taxing authority may initiate a court action against the owner to collect real property tax.