2019 Property Tax Sale Redemption Periods Extended

If you bought a property via tax lien or tax deed auction in 2019, you might have to wait a little bit longer than you were expecting to see the debt redeemed or to take possession of the property. That’s because in certain markets, local governments are extending the redemption period on properties sold via tax auction in 2019. The move is intended to help keep people in their homes during the COVID-19 pandemic and give them time to accumulate the funds they need to redeem their properties.

For example, in Hilton Head, South Carolina, several hundred properties are sold each year at delinquent tax sales. Once the properties are sold, property owners must pay the back taxes and additional fees and interest in order to keep their land. Until the end of the redemption period, the property remains in the original owner’s name. In late October, the local government passed a law to extend the redemption period for properties sold in 2019. This will affect 347 properties in Beaufort County and will give the owners an extra year to pay those back taxes.

South Carolina state senator Tom Davis, who helped create the legislation, and Beaufort County treasurer Maria Walls said the move was the only way to “help save those properties”. Although tax sales are intended to help municipal governments recoup much-needed funds lost to delinquent property taxes, tax lien and tax deed sales are, ultimately, designed to give homeowners every opportunity to recover their properties while also providing investors with an incentive to bid on the debt. With the emergence of the COVID-19 pandemic and the U.S. Center for Disease Control and Prevention (CDC)’s public stance on avoiding evictions whenever possible, the move to extend the redemption period makes sense.

For investors who purchased properties via tax sale in 2019, the important thing is to keep abreast of local developments and legislation affecting how you handle your tax lien and tax deed investments. Since these auctions and sales take place on a local level and every area already has unique regulations in place, it is imperative you remain informed about your responsibilities as the individual holding the debt or, in some cases, the deed to the property.

Interestingly, many local governments are not delaying their 2020 tax sales even if they have extended the redemption periods on 2019 properties that sold at auction. Not surprisingly, the lists for these sales are much longer in 2020 than they were last year, and the competition for the properties is likely to be fierce despite uncertainties around when an investor might actually receive payment or be able to take control of the property. Working with an investment firm or an investment group with existing relationships in the area could be a good way to get the “inside scoop” on which properties are the best bet for tax lien and tax deed investors, to navigate local laws and regulations, and to make sure you don’t overbid in what are sure to be “hot” auctions.