Selling a House With Delinquent Property Taxes: The Clock and the Cost

Educational only. This explains how these situations generally work. It is not legal, tax or financial advice, and the rules differ by state — talk to an attorney or CPA about your own situation before you act on any of it.

Can you sell a house with delinquent property taxes?

This page covers the mechanics: who gets paid first, how long you actually have, what you lose in a tax foreclosure, and the arithmetic on each route.

This is educational information, not legal or tax advice. Deadlines and remedies vary significantly by state and county. Talk to an attorney, a CPA, or your county treasurer about your own situation.

Yes. Delinquent property taxes are a lien against the property, not a bar to selling it. At closing, the title company or closing attorney pays the county from your proceeds and the buyer receives clear title. You do not need to pay the taxes off in advance — you need enough equity to cover them.

The question that matters is not whether you can sell. It is whether you sell before or after the county forecloses, because those two outcomes are worth wildly different amounts.

The tax lien outranks your mortgage

This is the mechanic that surprises people, and it explains everything that follows.

A property tax lien is generally a first-priority lien. It sits ahead of the mortgage, ahead of a home equity line, ahead of judgment liens and contractor liens. The bank that lent $150,000 on the house is behind the county that is owed $6,000.

Two consequences follow:

• Your mortgage servicer will often pay the taxes for you and add the amount to your loan balance, because their security is at risk. This converts a tax problem into a mortgage problem — often an escrow shortage that raises your monthly payment sharply.
• The county does not need to sue your lender or wait for it. The tax collection process runs on its own statutory track and can extinguish the mortgage along with your ownership.

How long you actually have

There is no national answer. The two states where we buy the most run on very different clocks, and they illustrate the range.

Michigan: a three-year process with hard calendar dates

Michigan runs delinquent property taxes through forfeiture and foreclosure under the General Property Tax Act, and the dates are fixed rather than discretionary.

Interest accrues at an additional 0.5% per month, non-compounded, computed from the March 1 preceding forfeiture, under MCL 211.78g. Michigan's Treasury publishes the full forfeiture and foreclosure timeline.

The March 31 date is the one to write down. After it passes, you no longer own the house, and nothing you do afterwards restores your title.

Ohio: slower, and with a statutory payment plan most people never hear about

Ohio counties may sell tax lien certificates to private investors or foreclose directly, and timelines vary by county rather than running on one statewide calendar.

The provision worth knowing is Ohio Revised Code 323.31. An owner-occupant of residential property with no existing tax lien certificate or foreclosure judgment against it is entitled to at least one opportunity to enter a written delinquent tax contract with the county treasurer, payable over up to five years. While that contract is valid and current, a tax certificate on the property cannot be sold.

That is a statutory right, not a favour. If you are an Ohio owner-occupant and nobody has mentioned it to you, call the county treasurer and ask for it by name.

What a tax foreclosure actually costs you

Until recently, several states kept the entire proceeds of a tax sale, including everything above the tax debt. In Tyler v. Hennepin County, 598 U.S. 631 (2023), the Supreme Court held that unconstitutional: Geraldine Tyler owed about $15,000, the county sold her condominium for $40,000 and kept the $25,000 difference, and the Court ruled that keeping the surplus violated the Takings Clause. You can read the opinion in Tyler v. Hennepin County directly.

Many people stopped reading there and concluded that a tax foreclosure now leaves them whole. It does not, and the June 2026 decision in Pung v. Isabella County settled the point against homeowners.

The Pung family owed $2,241.93 in property taxes on a Michigan home assessed at $194,400 for tax purposes. The county foreclosed and sold it at public auction for $76,008. The question was what "just compensation" means: the auction price, or what the property was actually worth?

The Court held it is the auction sale price, not fair market value, at least where the sale is fairly conducted. So the family recovers the surplus over the tax debt — roughly $73,766 — and has no constitutional claim to the roughly $118,392 gap between the auction result and the assessed value.

Read that as a seller. A tax bill of about $2,242 ended with a family losing well over a hundred thousand dollars of value they cannot recover, and the Supreme Court has now confirmed there is no remedy for it.

This is the entire argument for acting early. Not urgency, not pressure — arithmetic. Any sale you arrange yourself, to anyone, on the open market or otherwise, will almost certainly beat a county auction, because a county auction is a forced sale to a thin pool of bidders on a courthouse schedule.

The four routes, with real numbers

Take a Detroit-area house: $155,000 if fully repaired, $95,000 as-is, no mortgage (common where the property was inherited), and $11,500 in delinquent taxes, interest and fees.

Three honest conclusions from that table:

Repairing and listing wins, by about $5,200 over the cash sale — if you can fund $38,000 of repairs. Most people who are three years behind on property taxes cannot, which is the whole reason this situation exists. If you can, do that.

Listing as-is is the worst of the three, by a wide margin. It nets about $7,700 less than a direct cash sale, because an as-is listing reaches essentially the same investor buyers while adding a $5,445 commission and four more months of accruing tax interest. Paying a commission to reach the buyer you could have reached directly is the most expensive mistake on this page.

Doing nothing is not on the table as a strategy. The fourth route ends in a county auction, and Pung is what that looks like.

Note the taxes line rising across the columns. At 0.5% per month in Michigan, an $11,500 balance grows by roughly $690 a year in interest alone. Time is not neutral here.

Alternatives to selling — try these first

Selling is not the first answer, and anyone who tells you it is has an interest in the outcome.

• A delinquent tax payment plan. Ohio owner-occupants have a statutory right to one under ORC 323.31, up to five years. Michigan counties commonly offer hardship payment agreements through the treasurer's office. Ask the county directly; there is no fee to ask.
• A hardship or poverty exemption. Michigan municipalities administer a poverty exemption that can reduce or eliminate the current year's taxes for qualifying households, decided by the local board of review. Income thresholds and application deadlines are set locally.
• Check you are receiving the exemptions you already qualify for. A missed principal-residence exemption, senior exemption, veteran exemption or homestead credit can be the reason the bill was unaffordable in the first place. These are sometimes correctable retroactively.
• A free HUD-approved housing counsellor. They handle tax delinquency alongside mortgage default and cost nothing. Find one through the CFPB housing counsellor directory.
• Refinance or a home equity loan, if your credit and equity support it. This trades a senior tax lien for ordinary mortgage debt at a much lower interest rate than penalties.

If one of those solves it, you keep the house and this page has done its job.

When selling a house with delinquent property taxes is the right call

Selling generally makes sense when the arithmetic has stopped working rather than merely being uncomfortable:

• The delinquent balance plus needed repairs is approaching or exceeds the equity
• You are inside the final redemption year and cannot raise the full balance before the deadline
• The property is vacant and accruing taxes, insurance and utilities with no one benefiting
• You inherited it and the estate has no cash to service it — our guide to selling an inherited house covers the probate side
• The house cannot be insured or financed in its current condition, which rules out most retail buyers

Where the property is also in mortgage default, both clocks run at once and they are independent of each other. See selling a house in foreclosure for how that timeline interacts with this one, and our Michigan state guide for the transfer taxes and disclosure rules that apply on the way out.

Common questions

Can I sell my house if I owe back taxes?

Yes. The unpaid taxes are a lien that gets paid from your proceeds at closing, exactly like a mortgage payoff. You need enough equity to cover the balance, not cash in advance. If the taxes exceed the value of the house, a sale still may work but requires the county to agree to accept less, which is not guaranteed.

Who pays the delinquent property taxes when a house is sold?

The seller, out of the sale proceeds at closing. The closing agent pays the county directly and it appears as a line on your settlement statement. Buyers will not take title subject to a tax lien, so this is not negotiable in practice.

How long can property taxes go unpaid before you lose your house?

It depends on the state. Michigan runs a three-year forfeiture and foreclosure cycle ending with redemption rights expiring on March 31 of the third year. Ohio timelines vary by county and by whether a tax lien certificate has been sold. Call your county treasurer and ask for your specific foreclosure date — they will tell you.

Do I get my equity back if the county forecloses?

Only partly. Following Tyler v. Hennepin County you are entitled to the surplus above your tax debt. But in Pung v. Isabella County, decided June 23 2026, the Supreme Court held that just compensation is measured by the auction sale price, not the property's market value. Since tax auctions routinely sell well below market, the gap between the auction price and what the house was worth is generally not recoverable.

Will a tax lien stop me from selling?

No, it stops you from conveying clear title without paying it — which the closing handles automatically. What genuinely stops a sale is a tax foreclosure judgment, because at that point you no longer own the property to sell.

Can I sell a house that already has a tax certificate sold on it?

Often yes, but the payoff figure is set by the certificate holder and includes their interest and fees rather than just the original tax. Get a written redemption quote from the county before agreeing to any price, because the number is usually higher than the tax bill you remember.