Why are delinquent real property taxes subject to foreclosure?
Everyone who owns real property in Rutherford County is required to list this property as of the first day of January of each year. Most times, this listing is automatic, but if there have been improvements or changes in the property, these must be reported by state law to the Tax Office with the listing forms in January. By July 1 of each year, a tax rate will be set by both the Rutherford County Commissioners and the towns if the property is within city limits and/or fire districts. For each parcel of taxable real estate, these tax rates will be multiplied by each parcel's listed and assessed valuation as of January 1 and the product of this multiplication is that year's tax bill on the parcel. Usually in August, but no later than September, a tax bill will be mailed out to the last known address of the taxpayer as of January 1 for that year. The taxpayer has until January 5th of the following year to pay the tax bill without penalty. After that time, if the bill remains unpaid, it becomes delinquent and subject to penalties and interest as set forth by state law. Once the property tax is delinquent, it is subject to foreclosure action.
What if the taxpayer sells the real property after January 1, and the bill is not received by the new owner?
Under state law, the listing taxpayer is the responsible party for the taxes on property owned by the listing taxpayer as of January 1 of each year, even if the taxpayer sold the property after January 1. The Tax Office makes efforts to notify new owners of the existence of tax bills, but state law only requires that the tax bill be sent to the taxpayer as of January 1 of that year, and to the last known address of the taxpayer (NCGS 105-348). It is the duty of each owner of property to keep the Tax Office notified of address changes and to know that taxes are due and payable each year, regardless of whether or not a bill was received.
What does Rutherford County do with delinquent tax bills?
When a tax bill becomes delinquent, the Tax Office tries various methods to notify the taxpayer and potential owners about the delinquent bill to see if the bill can be collected without the extreme remedy of foreclosure. Sometimes the Tax Office will set up a payment plan with a taxpayer, but the Tax Office is not required to do so, and can terminate payment plans at any time. The final step in the collection procedure is a foreclosure warning letter sent by the Tax Office to the last known address of an owner and/or taxpayer. If these pre-foreclosure methods still fail, the Tax Office may assign parcels to the paralegal or private attorneys to commence foreclosure proceedings.
What happens when the Tax Office assigns property to attorneys to foreclose?
Once the Rutherford County Tax Office assigns properties to attorneys to foreclose, the Tax Office marks its computer records with the assignment, and will no longer accept direct payments or payment plans from taxpayers. All tax payments from the point of assignment must pay the taxes, interest, fees and costs in full, and must be made through the attorney. Persons interested in paying off properties in foreclosure must contact the attorney directly to whom that property was assigned to secure a payoff quote. At some point after the assignment, the attorney will start a title search of the property to determine, as a matter of public record, all the owners, mortgage holders, judgment and lien holders, and other interested parties required by state law. The attorney will then prepare a complaint listing the County of Rutherford as the Plaintiff (complaining party). The Defendant will be all those parties found by the record title search to be interested parties in the real estate (owners, mortgage holders, etc). The complaint will be filed in either Rutherford County District Court or Rutherford County Superior Court (depending on the amount of taxes owed). The summons and complaint will be delivered to each defendant by the sheriff, or by other approved means of service of process in civil lawsuits (FEDEX, certified mail, process server, etc). Each party that is served is clearly informed by the summons that written answer, if any, must be filed with the Court within 30 days from the date the papers were served on the party.
What is the legal effect of a tax foreclosure filing?
There is no real defense to a property tax foreclosure complaint and lawsuit. The main purpose of the foreclosure process is to notify all interested parties that any legal interest they may have in the property will be terminated and extinguished if a tax foreclosure sale of the property is completed. This is because property tax liens are ahead of and superior to all other liens, except (to a limited extent) income tax liens of record filed by the North Carolina Department of Revenue. When a superior lien is foreclosed on, it cuts off all junior liens and ownership rights of said liens to the property, but not the former owner.
What happens after the filing of the tax foreclosure complaint?
As noted above, each defendant has 30 days to file a written answer to the complaint, if they wish. Depending upon service on the parties and any answers filed, the attorney conducting the foreclosure will eventually move for a judgment of sale. Once a judgment of sale is entered, the property is scheduled for sale at the Rutherford County Courthouse on the front steps. Sales usually occur once a month. Notice of sale is published in The Daily Courier once a week for two weeks, posted at the Courthouse for at least 20 days, as well as being posted on the Rutherford County Revenue Department website. The sale is conducted by a Commissioner appointed by the Court. At the sale, the highest successful bidder puts up a 5% or $750 cash/certified check deposit with the attorney, whichever is greater, and the sale is reported to the Clerk of Court. After that, the sale remains open for 10 days for possible increased upset bids. Upset bids are calculated and received by the Clerk of Court for each property. If no upset bids are received, the attorney notifies the high bidder of the sale that the bidder has won, and that bidder has to come up with the balance of the purchase price. The process is the same when upset bids are received, except that the final high bidder after upset bids are completed is notified to bring in the purchase price of the final high upset bid. When the purchase price is paid under either sale process, the sale is confirmed and a Commissioner's deed is delivered to the new owner.
Can the tax foreclosure sale be stopped or redeemed from sale?
State law provides that any owner, mortgage holder or defendant in a filed tax foreclosure proceeding, can stop the foreclosure process at any time by redeeming the property. The redemption price is equal to the taxes, interest, fees, and costs of the foreclosure proceeding up to the date of the redemption. Owners wishing to redeem property from tax foreclosure and stop the foreclosure process must contact the assigned attorney for a redemption payoff figure. Redemption can even occur after a sale, as long as the sale has not been confirmed by the Court. However, once the foreclosure property sale has been completed with a confirmation order and delivery of deed, all rights of redemption are terminated.
Bankruptcy proceedings filed by the property owner under federal law can also stop tax foreclosures, but all the taxes, interest, fees, and costs of the action to the date of the bankruptcy filing must be paid as a priority claim in the bankruptcy proceeding.
How often does Rutherford County conduct tax foreclosure sales?
Sales are held at any time during the month or year.
Where are the foreclosure sales held?
The sales are held on the courthouse steps of the Rutherford County Courthouse, 229 N Main St Rutherfordton, NC 28139.
Do I have to register to participate in the sale? Do I have to present to bid?
You do not have to register for the sale; however, you must be present to bid on a listing.
What happens the day of the foreclosure sale?
The sale is conducted by a Commissioner appointed by the Court. At the sale, the highest bidder puts up a 5% or $750 cash/certified check deposit with the attorney, and the high bid is reported to the Clerk of Court. Since bidders may not have the exact amount of cash or certified funds with them, the high bidder is allowed a reasonable amount of time to obtain funds from the bank, usually no more than 30 minutes.
What is the status of title delivered by a tax foreclosure deed? Are there any warranties on the property?
The Commissioner will make it clear to all bidders present at the public sale that no representation or warranty of any kind is being made about the property or the status of title being delivered. Under state law, it is up to each bidder to carefully check out the title and status of the property being sold before placing either a public sale bid or an upset bid.
Are the properties subject to any liens?
As a general rule, the properties will not be sold subject to any other liens, such as a mortgage. However, if the property is being sold subject to another lien, this will be announced by the Commissioner before bidding begins on the property.
If I am the high bidder at the sale, what happens next?
Once the sale is complete, a 10-day upset bid period begins. For 10 calendar days, the sale remains open for potential increased upset bids. Upset bids of 5% or $750.00, whichever is greater, are received by the Clerk of court for each property. If an upset bid is filed, a new 10 day upset bid period begins. In this case, the attorney will contact the original bidder to let them know their bid was upset. Once no upset bids are received during the 10-day period, the attorney notifies the high bidder that he/she has won, and they must come up with the balance of the purchase price within three business days. When the purchase price is paid, the sale is confirmed and a Commissioner’s deed is delivered to the new owner.
What happens if the winning bidder is unable to produce the total amount due within three business days after they are deemed the winner?
The bidder will be in default and will be subject to immediate loss of all deposits, as well as subject to civil and/or contempt prosecution.
What happens to the properties that do not receive any bids at sale?
Properties that do not receive a bid will go into the County’s surplus property, which can be found by visiting: https://www.rutherfordcountync.gov/departments/county_commissioner/property_for_sale.php
Can a property listed for foreclosure sale be redeemed?
Properties listed are subject to redemption at any time prior to the entry of a confirmation order by the Court and delivery of a deed by the Commissioner. Efforts are made to update this website in a timely manner with redemptions and sale information, but cannot be relied upon to be up-to-date in "real time". For the status of any property, the bidder is required to check the court file and/or with the attorney handling the sale.
Can I pay the taxes due and acquire the property?
No. We do not sell tax liens or tax certificates. Properties that are sold on the courthouse steps must go through all of the steps included in a foreclosure action. There are NO exceptions. Paying someone’s taxes doesn’t give you any rights to the property.