What Happens If I Don’t Pay Property Taxes?

by ECL Writer
New Home Construction Defects in New York

Paying property taxes is a legal obligation that comes with owning real estate in New York. These taxes help fund vital public services such as schools, roads, and public safety, and failing to pay them can have serious consequences. If you’re a homeowner in New York and find yourself struggling to keep up with your property tax payments, it’s important to understand the potential ramifications of falling behind. In this article, Eastcoastlaws.com explore what happens if you don’t pay property taxes in New York, including the penalties you may face, the steps the government can take to collect unpaid taxes, and how you can protect yourself from losing your property. Whether you’re a homeowner facing financial difficulties or simply want to stay informed about your rights and responsibilities as a property owner, this information is essential to navigating the complex world of New York real estate.

The process of foreclosing on taxes in New York is comparable to that of foreclosing on a home. In court, a petition (lawsuit) is presented. The court will enter a default judgment against the property if you don’t address the action and include a list of your defenses. You inevitably lose if you don’t respond to the lawsuit, which is known as a “default judgment”. The property is then either sold at auction or simply transferred to the tax district. (N.Y. Real Prop. Tax Law § § 1120, 1136.)

But, you will have some time to make the necessary corrections to stop a tax foreclosure. Learn what kind of notice you’ll get if you’re facing tax foreclosure in New York and how to stop the procedure to keep your home from being taken away from you by reading on.

Notice Of The Tax Foreclosure

When the foreclosure petition is filed, a notice of foreclosure must be published in a newspaper (N.Y. Real Prop. Tax Law § 1124). On or before the first date of publication, the enforcing officer must send you a notice by certified and first-class mail stating that the foreclosure has started. (N.Y. Real Prop. Tax Law § 1125.) The notice must specify the last day for redemption (see below) that’s at least three months after the date of the first publication of this notice. (N.Y. Real Prop. Tax Law § 1124.)

Posting Might Also Be Required

If the mailings get returned, and there’s no alternate address to send them to, the notice must be posted on the property. (N.Y. Real Prop. Tax Law § 1125.)

Contents of the Notice

The notice will specify, among other things, the last day that you can redeem (see below) the property. (N.Y. Real Prop. Tax Law § 1125.)

Your Right To Redeem The Home in New York

In New York, you have a limited amount of time to prevent a tax foreclosure on your house. You have the opportunity to “redeem” the home by paying off any past-due taxes and other debts during this time frame (referred to as a “redemption period”).

How Long Do You Get to Redeem

The redemption period typically ends two years following the lien date (that is when the tax or other legal charges became a lien). Local law may, however, stipulate a longer redemption period. (N.Y. Real Prop. Tax Law § 1110.) 

Consequences Of Not Paying Property Taxes In New York

In New York, property owners are required to pay property taxes to their local government. Failure to pay property taxes can have serious consequences, including:

  • Interest and Penalties: If you don’t pay your property taxes on time, interest and penalties will start to accrue on the unpaid balance. In New York, interest on unpaid taxes accrues at a rate of 1% per month.
  • Liens: If you continue to neglect to pay your property taxes, the local government can place a lien on your property. This means that they have a legal claim to your property and can potentially foreclose on it if the taxes remain unpaid.
  • Foreclosure: If the delinquent taxes and fees remain unpaid after a certain period of time, the local government can initiate a foreclosure action against your property. This can result in the loss of your property, which can be sold at a public auction to satisfy the debt.
  • Damage to Credit Score: Failure to pay property taxes can also damage your credit score, as delinquent taxes can be reported to credit bureaus. This can make it difficult to obtain credit or loans in the future.
  • Legal Action: In extreme cases, the local government can take legal action against property owners who fail to pay their property taxes. This can result in fines, court costs, and other legal fees.

In short, it is crucial to pay your property taxes on time to avoid any negative consequences. If you are experiencing financial difficulties, it is important to reach out to your local government to discuss payment plans or other options that may be available to you.

Timeline For Property Tax Delinquency In New York

The timeline for property tax delinquency in New York can vary depending on the locality and the specific circumstances of the property owner. However, generally, the timeline for property tax delinquency in New York is as follows:

  • Property taxes are due twice a year, on January 1st and July 1st.
  • If property taxes are not paid by the due date, interest and penalties will start to accrue on the unpaid balance at a rate of 1% per month.
  • If property taxes remain unpaid after one year, the local government may place a lien on the property.
  • If property taxes remain unpaid for two years, the local government may initiate a foreclosure action against the property. However, this timeline can vary depending on the locality and the specific circumstances of the property owner.
  • The foreclosure process typically takes several months to a year or more, during which time the property owner may have the opportunity to pay the delinquent taxes and fees and redeem the property.
  • If the property is sold at a public auction to satisfy the delinquent taxes and fees, any remaining proceeds will be returned to the property owner.

It is important to note that property owners have the right to contest property tax assessments and should consult with a tax professional or an attorney if they have concerns about their property taxes or the delinquency timeline in their locality.

Penalties And Interest On Unpaid Property Taxes In New York

In New York, property taxes are a significant source of revenue for local governments. Property taxes are assessed annually by local assessors and collected by local tax collectors. Property owners are required to pay their taxes on time to avoid penalties and interest.

The penalty for late payment of property taxes in New York is 1% of the amount due for each month or fraction of a month that the tax remains unpaid, up to a maximum of 12% in total. For example, if a property owner owes $10,000 in property taxes and pays one month late, they will be charged a penalty of $100 (1% of $10,000). If they pay two months late, the penalty will be $200 (1% for the first month and 1% for the second month). The penalty increases by 1% for each additional month the tax remains unpaid, up to a maximum of 12%.

In addition to the penalty, interest is also charged on unpaid property taxes in New York. The interest rate is set annually by the state comptroller and is equal to the federal short-term interest rate plus 5%. The interest is charged from the due date of the tax until the date it is paid in full.

It is important to note that if property taxes are not paid for three years, the property can be sold at a tax auction. The property owner will be notified of the pending sale and given the opportunity to pay the outstanding taxes and fees before the sale occurs.

In some cases, property owners who are unable to pay their taxes may be eligible for exemptions, abatements, or payment plans. Exemptions and abatements are available for certain groups, such as veterans and seniors, while payment plans allow property owners to pay their taxes over a period of time.

In conclusion, property owners in New York who fail to pay their property taxes on time can face penalties and interest charges, and ultimately, risk losing their property. It is important to stay current on property tax payments or seek assistance if needed to avoid these consequences.

Options For Property Owners Who Can’t Pay Property Taxes In New York

In New York, property taxes are a major source of revenue for local governments. Property owners who are unable to pay their taxes have several options available to them.

Firstly, property owners can enter into a payment agreement with their local government. This will allow them to pay their taxes in installments over a period of time, instead of paying the full amount all at once. Property owners can contact their local tax collector’s office to discuss payment options.

Secondly, property owners may be eligible for a property tax exemption or abatement. There are various exemptions available to certain groups, such as veterans, senior citizens, and individuals with disabilities. Additionally, some local governments offer abatements to property owners who make energy-efficient improvements to their homes.

Thirdly, property owners can sell their property to pay off their taxes. If the property is sold for more than the amount owed in taxes, the owner can keep the excess funds. However, if the property is sold for less than the amount owed, the owner will still be responsible for paying the difference.

Finally, property owners who are unable to pay their taxes may be at risk of foreclosure. If a property owner’s taxes are not paid for several years, the local government may sell the property at a tax sale to recover the unpaid taxes. Property owners who are facing foreclosure should contact a local attorney or housing counselor for assistance.

Overall, property owners in New York have several options available to them if they are unable to pay their property taxes. It is important to explore all options and take action before the situation becomes direr.

Property Tax Exemptions In New York

Although being assessed, not all property is taxable. Some properties, including those held by governments or religious institutions, are totally free from paying property taxes. Some are partially exempt, including homeowners who qualify for the School Tax Relief (STAR) program and veterans who are entitled to an exemption on a portion of their properties.

The local choice of taxation jurisdiction offers the majority of exemptions (municipality, county, or school district). To find out what exemptions are available in your neighborhood, speak with your assessor.

Common property tax exemptions

Legal Options For Challenging Property Tax Assessments In New York

In New York, property owners who disagree with their property tax assessment have several legal options to challenge it. Here are some of the common methods:

  • Administrative Review: Property owners can request an administrative review of their property tax assessment from the Assessment Review Commission (ARC) or the Board of Assessment Review (BAR) in their municipality. Property owners can submit a grievance application to the ARC or BAR to challenge their assessment. The deadline to file a grievance is usually May 1st, but it may vary by municipality.
  • Small Claims Assessment Review (SCAR): Property owners can also challenge their property tax assessment through a Small Claims Assessment Review (SCAR) proceeding. This process involves filing a petition with the court that has jurisdiction over the property. The deadline for filing a SCAR petition is typically within 30 days of the final assessment roll publication date.
  • Judicial Review: If property owners are not satisfied with the outcome of the administrative or SCAR review, they can file a judicial review petition in the Supreme Court. The deadline to file a judicial review petition is typically within 30 days of the final determination of the administrative or SCAR review.
  • Alternative Dispute Resolution: Property owners can also opt for alternative dispute resolution methods, such as mediation or arbitration, to resolve their property tax assessment disputes with the assessor’s office.

It’s recommended that property owners consult with a qualified attorney who specializes in property tax assessments to understand the legal options available and to determine the best course of action for their specific situation.

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