Tax Certificate Process

THE TAX SALE PROCESS

This document was prepared to provide information relative to the tax sale and the legal requirements imposed on the County as well as the purchaser of a tax sale certificate.   Legal references refer to The Tax Property Article of the Annotate Code of Maryland. To ensure that you fully comply with the law and the required procedures, you should seek the advice of an attorney.  No information provided herein is intended to constitute legal advice and should not be relied upon in determining your rights and liabilities under governing law.

 

TAX SALE INFORMATION

Ordinary taxes, which include taxes on real property, are due and payable without interest as of the first day of July in each taxable year.  The taxes are overdue and in arrears on the first day of the succeeding October.  Interest accrues effective October 1 at the rate of one percent (1 %) per month or any fraction of a month until paid (§10-102, §14-602 and §14-603).

Any unpaid State, County and City taxes on real property constitute a lien on the real property from the date they become due until paid (Section 14-804).  Additionally, in accordance with local law that is specific to each County, other charges can constitute a lien on the real property so assessed and are to be collected and enforced in the same manner as County real property taxes.

It is mandatory that the Collector of Taxes sell, at the time prescribed by local law, any property on which taxes are in arrears (§14-808, §14-809).

Thirty days or more prior to the date property is first advertised for tax sale in a newspaper, the Collector is required to mail a statement to the person who last appears as owner on the Collector’s tax rolls.  This tax sale notice contains the person’s name, the amount of taxes due and a statement that if the taxes are not paid, the property must be sold (§14-812).

When the thirty-day period expires, the Collector of Taxes must publish a listing of the properties once a week for four successive weeks in one(1) or more newspapers, published in the County, notifying the owners that the property is to be sold at public auction.  Advertisement will contain the date, time and place of the sale, as well as a description of the property, name of person who last appears on the Collector’s tax roll as the owner, the assessed value of the property as determined by the last assessment and the tax sale amount

 

THE SALE

Each parcel of property liable to tax sale will be sold as an entirety as assessed by SDAT (§14-814)

The properties are sold at public auction to the highest bidder.  No property can be sold for a sum less than the advertised price.  When sold, the County’s lien on the property passes to the purchaser (§14-817).

The purchaser is required to pay the full amount advertised plus any High Bid Premium if applicable  by a point in time on the day of sale as set in the bidding rules of each County.  Please refer to the bidding rules in each County to determine if there is a High Bid Premium.

 

THE CERTIFICATE OF SALE

Approximately six months after date of sale, the Collector will deliver to the purchaser a certificate of sale.  The certificate sets forth the fact that the property described therein was sold by the collector to the purchaser, the date of sale, the amount bid, the advertised amount, and the annual interest rate payable upon redemption.  The certificate is void unless a proceeding to foreclose  the right of redemption is filed by the holder within two (2) years from the date of the certificate of sale.  Thereafter, all rights of the purchaser to the certificate cease (§14-820  and  §14-833).

Any certificate of sale, properly executed, is assignable and the assignment vests in the assignee, all the rights, title and interest of the original purchaser (§14-821).

The certificate of sale is presumptive evidence in all courts, in all proceedings by and against the purchaser, of the truth of the statement therein, and of the title of the purchaser to the property (§14-823).

The certificate of sale may be recorded among the land records of the County.  However, failure to record does not in any manner affect the right to institute foreclosure proceedings within the time limits prescribed (§14-822).

 

REDEMPTION BY OWNERS

The owner or other person having an estate or interest in the property sold has the right to redeem the property at any time until the right of redemption is finally foreclosed by an order of the court (§14-827).

Prior to any action by the purchaser to foreclosure, the owner or other person, may exercise the right of redemption by paying to the Collector of Taxes the amount required for redemption.  The purchaser or holder of a certificate of sale is not entitled to be reimbursed for expenses incurred within four (4) months after the date of sale (§14-843).

Payments must be made with guaranteed funds.  Please refer to each County for payment options.

If the redemption rights are exercised after an action to foreclose and there is any dispute, the person redeeming may apply to the court to fix the amount necessary for redemption.  Also, in case of a dispute regarding redemption, the Collector cannot accept money or redemption unless and until a certified copy of the order of the court fixing the amount necessary to redeem is filed with the Collector (§14-829).

On redemption, the plaintiff or the holder of a certificate of sale may be reimbursed for expenses incurred in any action or in preparation for any action to foreclose the right of redemption” as provided in §14-843(a).  If an action to foreclose has been filed, the plaintiff or holder of a certificate of sale may be reimbursed for expenses in accordance with §14-843(a)(4) & (5).  If an action to foreclose the right of redemption has not been filed, and the property is redeemed more than 4 months after the date of the tax sale, the holder of a certificate of sale may be reimbursed for expenses in accordance with §14-843(a)(3) & (5).  The plaintiff or holder of a certificate of sale is not entitled to be reimbursed for any other expenses or attorney’s fees that are not included in §14-843(a).    

The person redeeming is required to pay to the Collector, the total amount of money necessary to redeem plus interest and subsequent taxes with related interest and penalties to the date of redemption (§14-828).

During the period of redemption, the owner of the property has the right to continue in possession of and to exercise all rights to ownership until such time as the right of redemption is foreclosed (§14-830).

 

ACTIONS TO FORECLOSE

The holder of a certificate of sale may at anytime after six months from the date of sale, file a complaint in Circuit Court to foreclose all rights of redemption of the property to which such certificate relates (provided that all notice requirements have been met).  If such action is not taken within a two-year period subsequent to sale, the certificate is null and void (§14-833). 

The complaint to foreclose rights of redemption must set forth:  (a) the fact of issuance of the certificate, (b) a description of the property, (c) a statement that the property has not been redeemed, (d) a request for process directed to the defendants named in the complaint; (e) a request for an order of publication directed to all interested parties, (f) a request that the court pass a final judgment foreclosing all rights of redemption of the defendants and to the property and (g) a statement of the amount necessary to redeem.  The certificate of sale must be attached and made a part of the complaint (§14-835).

The plaintiff in the proceeding to foreclose the right of redemption must be the holder of the certificate of sale.  The defendants in the proceedings must be: (a) record title holder(s) of the property, (b) owner of the leasehold to such property, if applicable, (c) mortgage holders, (d) the trustee under any deed of trust recorded against the property, (e) the County and (f) the State of Maryland, if appropriate.  (§14-836).

In a case where the owner cannot be ascertained, the owner may be included as a defendant by the following designation “Unknown Owner of Property” followed by a complete description of the property (§14-837).

Every complaint to foreclose the right of redemption filed against an unknown owner must be accompanied by an affidavit of the person making the search, indicating that the owners of  the property remain unknown, even though a complete search of the records for at least the forty-year period immediately preceding the institution of the suit was made (§14-838).

Upon the filing of the complaint, the court will issue a summons for all defendant parties named in the complaint (§14-839).  At the same time the summons is issued, the court will issue an order of publication directed to all defendants. (§14-840).

At the expiration of the time limit set in the order of publication and summons, the court shall pass its judgment in the proceedings.  The judgment is final and conclusive upon the defendants.  If the court finds for the plaintiff, the judgment shall vest in the plaintiff an absolute and indefeasible title in fee simple.  If the property sold was subject to ground rent, the judgment shall vest a leasehold interest in the plaintiff (§14-844).

The judgment of the court will direct the Collector to execute a deed in fee simple or in leasehold, as the case may be, upon payment to the Collector by the certificate holder of the balance of the purchase price, together with all taxes, interest, penalty and charges accruing subsequent to the sale.  The deed is to be prepared by the holder of the certificate of sale or his/her attorney.  The Collector is not obligated to execute the deed until the Clerk of the Court has furnished a collector with a certified copy of the judgment.  If the holder of the certificate does not comply with the terms of the final judgment within 90 days, the judgment may be stricken by the court upon the motion of an interested party (§14-847).

Once a judgment is granted, the plaintiff becomes liable for the payment of all taxes due after the judgment and for any surplus bid, interest and penalties on the taxes (§14-844).

Any person acquiring title to property under and pursuant to the terms and provisions of this subtitle shall be entitled to issuance of a writ of possession of the property (§14-850).

All bidders should refer to the bidding rules of the County whose auction they will be participating in to ensure that they are familiar with any rules that are specific to that County.  Acceptance of a County’s individual bidding rules is required upon registration as a bidder.



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