Behind on Property Taxes? Sell Your Home Before the County Takes It

## Understanding Property Tax Delinquency in California Property taxes are the lifeblood of local government in California, funding schools, fire departments, roads, and essential services. When property taxes go unpaid, the county does not just send reminders — it follows a specific legal process that can ultimately result in losing your home. Understanding this process is essential to protecting yourself. ### How California Property Taxes Work California property taxes are governed primarily by the **California Revenue and Taxation Code** and are administered by each county's Tax Collector. Under **Proposition 13** (1978), the base-year assessed value of a property is set at its purchase price and can increase by no more than 2% per year, unless a change in ownership or new construction occurs. Property taxes are due in two installments: - **First installment:** Due November 1, delinquent after December 10 - **Second installment:** Due February 1, delinquent after April 10 When taxes become delinquent, a 10% penalty is added. If both installments remain unpaid by June 30, the property is declared **tax-defaulted** under Revenue and Taxation Code §3436. ### The Tax Default and Tax Sale Process **Year 1: Tax Default.** When property taxes are not paid by June 30 of the fiscal year they are due, the property becomes tax-defaulted. A redemption penalty of 1.5% per month (18% annually) begins accruing on the unpaid amount under Revenue and Taxation Code §4103. **Years 2-4: Accumulating Debt.** Each year that taxes remain unpaid, additional annual taxes, penalties, and costs are added. The total delinquent amount grows rapidly. A property with $5,000 in annual taxes can accumulate $25,000 or more in debt within just a few years. **Year 5: Power to Sell.** Under Revenue and Taxation Code §3691, a tax-defaulted property becomes subject to the county's power to sell after **five years** of delinquency (or three years for properties not eligible for the homeowner's exemption). The Tax Collector may then schedule the property for a **tax sale** — a public auction where the property is sold to satisfy the tax debt. **The Tax Sale.** At a California tax sale (governed by Revenue and Taxation Code §3691-3731), the property is sold to the highest bidder. The minimum bid includes all delinquent taxes, penalties, costs, and fees. Any amount above the minimum bid goes to the former owner as "excess proceeds" under Revenue and Taxation Code §4675, but claiming these funds requires filing a claim within one year of the sale. ### Why Tax Delinquency Is More Dangerous Than Many Realize Many homeowners assume they can simply catch up on property taxes when they are ready. The reality is more urgent: **The debt grows fast.** Between the 10% initial penalty and 1.5% monthly redemption penalty, the cost of catching up increases significantly every month. A $10,000 tax bill can become $15,000 or more within two years. **Tax liens are superior liens.** Under California law, property tax liens take priority over virtually all other liens — including mortgages, HELOCs, and judgment liens. This means the county can sell your property even if you are current on your mortgage. **No court proceeding is required.** Unlike mortgage foreclosure, the county does not need to go through the courts to sell your property at a tax sale. The process is administrative, and once the power-to-sell period expires, the Tax Collector can proceed. **You may not receive adequate notice.** While the county is required to mail notices under Revenue and Taxation Code §3365, homeowners who have moved, have incorrect mailing addresses on file, or simply discard what looks like junk mail may not realize the severity until it is too late. ### Common Reasons for Property Tax Delinquency We have worked with homeowners across Southern California who fell behind on property taxes for many different reasons: - **Financial hardship** — job loss, medical expenses, or business failure - **Inherited properties** where heirs did not realize taxes were owed - **Elderly homeowners** on fixed incomes who could not keep up with rising costs - **Absentee owners** who lost track of a property they no longer use - **Disputes** with the county over assessed value or exemptions - **Properties tied up in probate or divorce** where no one took responsibility for taxes Regardless of the reason, the solution is the same: act before the county exercises its power to sell. ### California Programs That May Help Before deciding to sell, you should know about programs that might help you keep your home: **Property Tax Postponement Program.** Under Revenue and Taxation Code §20581 et seq., California offers a program allowing homeowners who are at least 62 years old, blind, or disabled to postpone payment of property taxes. The state pays the taxes and places a lien on the property, which must be repaid when the property is sold or the homeowner passes away. **Installment Payment Plans.** Most California counties offer installment plans for delinquent taxes under Revenue and Taxation Code §4217-4220. These plans typically require a 20% down payment and allow the balance to be paid over five years with interest. **Supplemental Tax Corrections.** If your tax bill is incorrect due to an assessment error, you can file for a correction. Many homeowners discover they have been overpaying without realizing it. If these programs do not work for your situation — or if you simply want to sell and move on — SHH Holdings can help. ### How SHH Holdings Helps Tax Delinquent Property Owners We purchase tax delinquent properties throughout Los Angeles, San Bernardino, Riverside, and Orange counties. Our process is designed for homeowners who need to resolve their tax situation quickly. **We pay off all delinquent taxes at closing.** The full amount of unpaid taxes, penalties, and costs is paid through escrow at closing. You do not need to come up with the money to redeem the property before selling. **You keep your equity.** Our purchase price reflects the fair market value of your home minus the tax debt and any other obligations. The difference — your equity — goes to you as cash at closing. **We buy as-is.** Tax delinquent properties often have deferred maintenance because the owner could not afford both taxes and upkeep. That is fine with us. We buy homes in any condition. **We close fast.** If your property is approaching a tax sale deadline, speed matters. We can close in as few as 7 to 14 days, well ahead of most county timelines. ### Do Not Wait Until the Tax Sale Once your property is sold at a tax sale in California, your ownership is transferred and there is no right of redemption — unlike some other states. The sale is final. Any equity above the minimum bid may be available as excess proceeds, but you must proactively file a claim, and the process is not guaranteed. Selling your property to SHH Holdings before the tax sale protects your equity, gives you cash in hand, and eliminates the stress of mounting tax debt. Call us at **(626) 414-4859** today for a free, confidential consultation.