New York City will hold its Annual Tax Lien Sale on May 15, 2015.
There are many New Yorker’s who, for what ever reason, don’t pay their real estate taxes and water and sewer bills. In order for the city of New York to continue to provide the services that we all need, like the fire department, sanitation and the delivery of clean drinking water to our homes, each homeowner needs to pay their fair share of the bills those services generate. After all, sanitation workers, firemen and the like don’t work for free.
But life happens sometimes, and a tax payer simply does not have the money to pay the bill (bringing to mind the proverbial getting blood from a stone), so the city needs to find an alternate way to get the money it needs to continue functioning. That’s where the tax lien sale comes in.
So What Exactly is a Tax Lien?
A tax lien is a claim against a piece of real estate in order to satisfy a debt. So if a you owe the City of New York $10,000 in taxes, interest and fees, it will place a tax lien on your property for that amount, and then sell that lien to a third-party.
In most municipalities in the US individual investors can purchase tax liens, but New York City does not sell its tax liens to individuals, but to large corporate investors only. Once purchased, these corporate investment firms have the right to collect the money owed.
What Happens If a Lien on Your Property is Sold?
Once a lien on a property is sold, the debt does not disappear. The corporate investment firm’s servicing company will make every effort to collect the debt. Fees and interest will pile up at an unbelievable rate, increasing the debt even more. No doubt it will show up on your credit report and your credit score will drop drastically. If you decide to sell your property, the debt, including all of the interest and fees, will have to be paid or you cannot sell. Eventually the property can be foreclosed on to collect the debt.
For more information about the tax lien sale, go to the New York City Department of Finance’s website.
If you need more information about the best way to sell your property when there are tax liens in place, give me a call or email me by clicking here.