Tax Lien Sales in Nevada
Tax lien sales of real property have proliferated in Nevada in the last few years as one of the by-products of the volatile real estate market. If you’re considering purchasing real property at a tax lien sale, keep the following information in mind.
What’s a Tax Lien?
In Nevada, real property is taxed according to its assessed value, and those taxes are paid to the county in which the property is located. Real property taxes are payable on a quarterly basis. However, if the taxes become delinquent, the county has the ability to start the process of establishing a tax lien on the real property.
The First Step
The county mails a notice of delinquency to:
The owner of the real property
The taxpayer for the real property
Any other lienholder (for example, a mortgage company) who requested a copy of any delinquency notices
The notice of delinquency is mailed thirty days after the first Monday in March.
Publication of the Notice
If the taxes remain delinquent thirty days after the first Monday in April, the tax receiver for the county causes the notice of delinquency to be published:
in a newspaper that services the county
on the county’s website
Issuance of a Certificate on the Real Property
If the taxes still remain delinquent at 5:00 p.m. on the first Monday in June, the tax receiver issues a certificate to the county treasurer authorizing the county treasurer to hold the property subject to a right of redemption within two years after the date of the certificate.
In other words, the taxpayer or owner of the real property has two years from the issuance of the certificate to pay all accrued taxes plus any additional costs, such as interest, penalties, and fees, to prevent the property from being sold at a tax lien sale.
But what if the taxes still aren’t paid?
The Second and Final Notice of Delinquency
If the taxes on the real property remain unpaid during the two-year period after the issuance of a certificate to the county, the county will send a second notice of delinquency to the owner and taxpayer.
This second notice is sent sixty days prior to the expiration of the two-year redemption period.
When is the Real Property Deeded to the County?
If the owner or taxpayer does not redeem the real property within this two-year period, the county tax receiver deeds the property to the county treasurer in trust for the use and benefit of the State and county.
The county can now put the property up for sale.
The County Must Provide the Owner with a Notice of Sale
If the county decides to sell the real property to recoup back taxes and costs, the county mails a notice of sale to the owners and any other lienholders of record at least ninety days prior to the date of the sale.
The notice of sale must also be posted in at least three public places in the county twenty days prior to the sale, or the notice can be published in a newspaper published in the county.
The Owner Has One Last Chance to Redeem the Property Prior to Sale
The owner of the real property still has an opportunity to regain ownership of the property prior to the sale.
In order to do so, the owner or the taxpayer must pay:
all taxes
all costs
all interest and penalties
no later than 5:00 p.m. on the third business day before the date scheduled for sale of the property.
Upon payment of all taxes and costs, the county will reconvey the real property back to the owner.
The Tax Lien Sale
In most counties in Nevada, tax lien sales are handled like auctions. This article covers the basics as well as specifics for Washoe and Clark Counties. The remaining counties in Nevada will be covered in a separate article.
Washoe County Tax Lien Sales
The Treasurer’s Office generally conducts one real estate tax auction sale annually, usually in April. In February:
The Treasurer’s Office will have the specific date, time, and location of the auction available
The Assessor’s Office will have maps for all properties to be sold
However, keep in mind that the property owner has until three days prior to the sale to redeem the property, and therefore all properties on the list might not be up for sale at the auction.
The Bidding Process
In order to place a bid on property to be auctioned in Washoe County, a bidder must register on the day of the auction.
No cost to register
Must present valid driver’s license or I.D.
Must arrive at the location of the auction and be in the registration line no later than 9:30 a.m.
The auction begins at 10:00 a.m. or as soon thereafter as all bidders are registered. Bidders receive their bidder numbers and instructions concerning the bidding process during the registration process.
Bidders must be present to bid and be prepared to pay a non-refundable $500.00 deposit immediately for any successful bid. The remaining balance of a successful bid will be due in full by 5:00 p.m. the day after the sale. Payment must be in the form of cash, a cashier’s check, a certified check, or a money order.
The minimum opening bid at a tax lien auction will be either:
The amount of delinquent taxes, delinquent assessments, costs, interest and penalties, or
The assessed valuation, whichever is greater. The assessed value is approximately 35% of the appraised value, which can be greater than the delinquent taxes, costs, and penalties.
Clark County Tax Lien Sales
Auctions are normally held in the spring. However, there may be an additional auction in the fall.
Information regarding the auctions will be posted on the county’s website and will also be available by calling the Clark County Treasurer’s office. The Clark County Assessor’s Office will have maps for the properties to be sold which can be viewed in their office or purchased for a fee.
The Bidding Process
Registration for tax lien auctions:
Are limited to 280 bidders
Each bidder must pay a $1,000.00 registration fee in order to participate in the auction. The registration fee will be applied to the purchase price for successful bidders. If the bidder is unsuccessful, the fee will be refunded by the county in approximately 4-5 weeks.
Bidders must also be present to bid. Oral bids at a public auction are considered to be legal and binding contracts. The county will not accept sealed bids.
Payment for a successful bid:
Must be paid in full at the Treasurer’s Office by 4:00 p.m. on the day of the auction
Must be in the form of cash, cashier’s check, or money order payable to the Clark County Treasurer
If a bidder defaults on the purchase, the bidder’s registration fee will be forfeited and the bidder will be banned from future auctions.
The minimum bid consists of:
All delinquent taxes, penalties, interest, and costs legally chargeable against the property
May also include liens for:
delinquent sanitation/reclamation
sewer
special improvement district assessments
nuisance abatements
other similar charges.
Other Nevada Counties
In order to keep this article from becoming unwieldy, we will be covering similar information for other Nevada counties in a future article.
In the meantime, you can find specific information regarding the tax lien sale process in other Nevada counties by contacting the Treasurer’s Office or the Assessor’s Office for the county.
Obtaining a Tax Lien Sale Deed
Following payment of the successful bid, the county will prepare a quitclaim deed for the property using the information on the bidder’s registration form. The Treasurer’s Office will record the quitclaim deed within 30 days of the auction date.
Challenges to Tax Lien Sales
While there is no redemption period on property acquired through a tax lien sale, there is a two-year period in which the previous owner may challenge whether the taxes were paid or whether the proper procedure was followed in connection with the sale. Therefore, you may have difficulty obtaining title insurance on the property. In addition, a tax lien sale may not satisfy all other encumbrances on the real property.
In order to remove any potential clouds on the title to property you acquire through a tax lien sale, you may want to consider filing a quiet title action to remove any adverse claims to the real property.
If you need advice or the assistance of an experienced real estate attorney concerning tax lien sales or removing clouds from the title of property purchased at a tax lien sale in Nevada, The Stone Law Firm is available to help you.