What happens if you don’t pay your Hawaii property taxes? You might eventually lose your home.
People who own real property must pay property taxes. The government uses these taxes to pay for schools, public services, libraries, roads, parks, and the like. Typically, the tax amount is based on a property's assessed value.
When homeowners don't pay their property taxes, the overdue amount becomes a lien on the property. A lien effectively makes the property act as collateral for the debt. All states have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes.
So, if you don't pay your real property taxes in Hawaii, the tax collector can sell the property to a new owner at a tax sale. Fortunately, you'll have time to get current on the delinquent amounts before and after a sale.
Do You Have to Pay Property Taxes in Hawaii?
Yes. If you don't pay your real property taxes in Hawaii, the overdue amount becomes a lien on your home.
What Are the Consequences of Not Being Able to Pay Property Taxes in Hawaii?
Once the lien has existed for three years, the tax collector can sell your home at a public auction to collect the delinquent taxes. This process is considered a "foreclosure without suit." (Haw. Rev. Stat. § 231-63.)
How to Stop a Hawaii Tax Sale
You must pay the past-due taxes, along with interest, penalties, costs, expenses, and charges accrued or set to accrue by the date of payment, to stop the sale. (Haw. Rev. Stat. § 231-63, § 231-65.)
How Property Tax Sales in Hawaii Work
Before the sale, the tax collector must mail you a notice about the upcoming sale and give public notice.
Notice By Mail Before the Tax Sale Takes Place
In Hawaii, the tax collector must mail you a notice by registered mail, return receipt requested, at least 45 days before the sale date. (Haw. Rev. Stat. § 231-63.)
Public Notice Before the Tax Sale Happens
The tax collector must give public notice in a newspaper for at least four weeks before the sale and post notice in at least three conspicuous places within the taxation district. One of the three postings will be on the property if the land has improvements, like a dwelling. (Haw. Rev. Stat. § 231-63.)
Hawaii Tax Sales Are Public Auctions
The tax sale is a public auction where the collector sells the home to the highest bidder. The sale price will be at least enough to satisfy the lien plus interest, penalties, costs, and expenses. (Haw. Rev. Stat. § 231-63.)
After the sale, the high bidder (the purchaser) gets a deed (title) to the home, subject to your right of redemption. (Haw. Rev. Stat. § 231-67.)
Can I Get My Home Back After a Hawaii Tax Sale?
If you lose your home to a Hawaii tax sale, you have the right to get it back, called the "right of redemption," within one year after the sale. But if the deed isn't recorded within 60 days after the sale, the redemption period is one year from the recording date. (Haw. Rev. Stat. § 231-67.)
How Much Does It Cost to Redeem My Home After a Hawaii Tax Sale?
To redeem the property, you must pay the purchase price, costs, expenses, and interest at the rate of 12% per year. But you don't have to pay interest during the extension if the redemption period is extended because the deed wasn't recorded within 60 days of the sale. (Haw. Rev. Stat. § 231-67.)
What Happens to My Mortgage in a Tax Sale?
Because a property tax lien has priority, mortgages (and deeds of trust) get wiped out if you lose your home through a tax sale process. So, If your loan isn't escrowed and you fail to pay the property taxes like you're supposed to, the loan servicer will usually advance money to pay delinquent property taxes to prevent a tax sale from happening.
Most mortgages have a clause allowing the lender to add the amount it paid to bring the taxes current to your loan balance. You'll then have to make repayment arrangements with the servicer or potentially face a foreclosure.
What Options Do I Have If I Can't Afford to Pay My Property Taxes in Hawaii?
If you're having trouble paying your property taxes, you might be able to reduce your tax bill or get extra time to pay.
Getting Help
Talk to a foreclosure, tax, or real estate lawyer if you're facing a tax sale in Hawaii and have questions about the process or need help redeeming your property.
To learn more about property taxes and other aspects of homeownership, get Nolo's Essential Guide to Buying Your First Home by Ilona Bray, J.D., Attorney Ann O'Connell, and Marcia Stewart.
I'm well-versed in the topic of property taxes, particularly in the context of Hawaii, and I can provide you with comprehensive information on the concepts mentioned in the article.
Firstly, property taxes are crucial for funding various public services such as schools, libraries, roads, and parks. In Hawaii, like in many other states, property taxes are based on the assessed value of the property.
Now, let's delve into the consequences of not paying property taxes in Hawaii. When homeowners fail to pay their property taxes, the overdue amount becomes a lien on the property. This lien allows the local government to sell the home through a tax sale process to collect delinquent taxes.
The article mentions that after a lien has existed for three years, the tax collector can sell the home at a public auction in a process known as "foreclosure without suit." To stop this tax sale, homeowners must pay the past-due taxes, along with interest, penalties, costs, expenses, and charges accrued by the date of payment.
The tax sale itself is a public auction where the property is sold to the highest bidder. The sale price must be sufficient to satisfy the lien, including interest, penalties, costs, and expenses. After the sale, the high bidder receives a deed to the home, subject to the homeowner's right of redemption.
Importantly, the right of redemption allows the homeowner to reclaim the property within one year after the sale by paying the purchase price, costs, expenses, and interest at a rate of 12% per year.
In terms of mortgages, property tax liens take priority, and mortgages get wiped out if the home is lost through a tax sale. Lenders may advance money to pay delinquent property taxes and can add this amount to the loan balance.
If homeowners are unable to afford property taxes, there are options available, such as seeking help from a foreclosure, tax, or real estate lawyer. These professionals can provide guidance on the process and help with redeeming the property.
For further insights into property taxes and homeownership, the article recommends referring to Nolo's Essential Guide to Buying Your First Home by Ilona Bray, J.D., Attorney Ann O'Connell, and Marcia Stewart.
