It’s said that there are only two certainties in life: death and taxes. When it comes to delinquent property taxes, however, you might start to wonder which option is less painful. Here’s an overview of how property taxes work in Fulton County, and what happens when you don’t pay them on time.
Who handles property taxes?
For starters, property taxes for both the city of Atlanta and Fulton County are handled by the office of the Fulton County Tax Commissioner. Tax notices are issued once a year, normally in July. (If you haven’t received a tax bill by July 15, you can call the Commissioner’s office at 404-613-6100.) Payment is typically due by the end of the year or the first month of the following year, but it can vary from year to year. You can check the exact due date on the Commissioner’s website under “Important Dates.”
What happens if I’m delinquent in paying my property taxes?
You start accruing interest on your unpaid taxes on the first day after they are due. Interest is charged every month (prime + 3% as of July 1, 2016) until the bill is paid in full. Also, a penalty of 5% is charged on the 120th day after your due date, and every 120 days thereafter up to a maximum of 20%. And as icing on the cake, you get charged a “service fee” of 1% per month for any taxes/fees over $1000. So you’re now paying fees on fees. Holy guacamole!
Needless to say, a delinquent property tax can rack up some pretty hefty fees quickly. If you’re delinquent on your property taxes, you’ll need to pay the tax bill plus any interest and penalties. You can pay a portion of your tax bill, but you will still be charged interest on the unpaid principal. You can pay over the phone or online with a credit/debit card or an electronic check. Or, if you prefer snail mail, mail in a check to:
Fulton County Tax Commissioner
141 Pryor Street, Suite 1113
Atlanta, GA 30303
What happens if I fall more than 30 days behind on my property taxes?
If you own property in Fulton County, then Tax Commissioner automatically gets a tax lien on your property on January 1. That gives the tax man the right to sell your property in order to collect his past-due taxes. Tax liens are like herpes: you can suppress them for a while, but they never really go away. If you pay your taxes in full and on time, the tax lien goes away but only until January 1 of next year. Gah!
It might be that the homeowner is out of state, or perhaps recently inherited or bought the property and didn’t know about the unpaid taxes. That’s why the Tax Commissioner is required by law – OCGA Title 48 Chapter 3, to be precise – to give 30 days’ notice to the homeowner that they are behind on taxes and that their home will be seized and sold.
If you don’t pay within 30 days of receiving notice of delinquent taxes, the Commissioner can issue a Tax Execution (also known as a Fi.Fa. or fieri facias), which authorizes the Sheriff to auction your property to pay the unpaid taxes. Guess what bonus comes with a Fi.Fa.? If you guessed “more fees”, you are correct! A Fi.Fa. carries its own interest rate of 1% per month from when the tax bill was due (so you’re being retroactively charged interest even for the time period after the tax bill became overdue but before the Fi.Fa. was issued.)
How does a property tax sale work?
So far, we’ve seen how being late on your property taxes tacks on penalties, interest, back-dated fees, surcharges on the fees. So it’s no surprise that some homeowners simply can’t catch up once they fall behind on their property taxes. Once the 30 day notice window has expired, your property may be put up for auction. Auctions are held on the first Tuesday of the month from 10 am to 4 pm on the steps of the courthouse. Properties to be auctioned will be advertised for four consecutive weeks prior to that Tuesday in the Fulton Daily Report.
At the auction, the starting bid will usually be the unpaid amount of property taxes but the final bid amount may be significantly higher. Whoever submits the winning bid must pay in full on the same day via cash, certified check, cashier’s check or money order. The winning bidder gets the deed to your home.
How does the right of redemption work?
If your home gets sold at a tax auction while you were away, not all hope is lost! The original home owner – or a creditor, or anyone else with an interest in the property, such as a bank with a mortgage on the house – has a statutory right of redemption, meaning that for one year, you can buy back your home from the winning bidder at the auction. The redeemer will have to pay the winning bidder whatever they paid at the auction, plus a premium of 20%.
After the proceeds of the sale are used to pay off the taxes, there may still be excess funds. The Tax Commission may file an Interpleader Action, which basically asks the courts to dissolve who gets the remaining money. The excess funds are distributed to “intended parties” in the order of their priorities.
(For a while, some savvy investors exploited a loophole in the redemption law. Their strategy involved buying an unrelated debt that was owed by a homeowner whose house had been auctioned. Because they now owned debt of that homeowner, this technically made them a “creditor”, and they could exercise the right of redemption on the auctioned property. They would pay off the winning bidder, which created a “super priority lien”. In practical terms, this leapfrogged the investors ahead of everyone else in terms of “order of priorities” for receiving excess funds. However, the Georgia judiciary recently put an end to that practice.)
What happens after the right of redemption?
During the 12 month redemption period, the auction winner cannot enter the property, collect rent or make any improvements to the property. After the redemption period has expired, the auction winner can foreclose on the prior owner’s right to redemption. In order to start this process, the auction winner has to send notice of the foreclosure to the owner and all other interest holders and publishing notices for four weeks in the county where the property is located.
However, it doesn’t stop there! Properties bought at auctions are generally considered to have “clouded” titles, and it may be difficult to finance or sell it.Once the right of redemption has been foreclosed, the auction winner will have to start a “quiet title” action to establish his/her title “against the world” and to clear any clouds to the title.
If you are a homeowner of a property that is being auctioned for unpaid taxes, or an investor thinking about delving into the complicated world of tax sales, you should contact a qualified Georgia real estate attorney for legal advice. Fill out a request form for a free consultation today!