by Lee Duin, Director - Polk County Treasurer

What is a tax sale?

A tax sale is a requirement of Iowa law in which delinquent property taxes on parcels of land or mobile/manufactured homes are sold to investors attending the annual sale. The sale, held the third Monday of June, is required by Iowa law so that all taxing authorities, i.e., cities, schools, counties, etc., receive the full amount of property taxes levied for their operations. The property owner has a limited time period to redeem the tax sale by payment to the county treasurer of the total amount of taxes sold at sale and interest of 2% per month from the date of sale to the date of redemption. If redemption does not occur during the legal time period, the county treasurer is required by Iowa law to issue a tax sale deed transferring ownership of the property to the investor that paid the taxes at the time of the tax sale.

What if I wasn’t notified that taxes were due?

Iowa law states that failure to receive a tax statement does not waive the interest that accrues on delinquent taxes. It is the property owner’s responsibility under Iowa law to determine their property tax liability and make sure they are timely paid.

The treasurer’s office collects taxes based upon a fiscal year beginning July 1st and ending June 30th. The total amount of property tax due is divided into two installments; the first installment is due by September 30th and the second installment is due by the following March 31st. The treasurer’s office mails a delinquent notice on February 1st to properties with delinquent taxes. On May 1st, after the March property tax deadline, they mail another delinquent notice for properties with delinquent taxes. The May 1st delinquent notice includes a statement that taxes on the parcel will be advertised and offered at the annual tax sale if the delinquent taxes are not paid. At the same time the May 1st delinquent notices are mailed, a four-dollar delinquent notice preparation fee is added to the delinquent tax amount. If delinquent taxes are not paid by the end of May, the delinquent tax amount, along with other property information such as owner name, address, and legal description, are advertised in a newspaper of general circulation on or about the first week in June.

What happens at tax sale?

On the third Monday in June the treasurer offers and sells delinquent taxes against properties in the county to tax sale investors. The county treasurer must sell the delinquent taxes in an open competitive bidding process. During the tax sale, each item is offered for sale to the investors, who may bid the percentage of undivided interest downward from 99% to 1%. The bid-down percentage will give the winning investor an undivided interest in the property should the county ever issue a treasurer’s tax sale deed.

The investor pays to the treasurer the total amount of delinquent tax, interest, fees and costs due against the property. The treasurer then issues a document called a ‘tax sale certificate of purchase’ to the investor for the amount of his/her ‘investment’ and places a ‘tax sale lien’ against the parcel. The county treasurer sends a notice by regular mail to the property owner(s) notifying them that delinquent taxes against their property were sold at tax sale.
The tax sale certificate of purchase issued to the investor does not convey property ownership. The property owner retains ownership of the property and may still ‘redeem’ the tax sale during the statutory redemption period. To ‘redeem’ the tax sale, the property owner must pay to the treasurer the amount of delinquent tax purchased by the investor, plus accrued interest and fees, within the payment period provided by law. At the time of redemption, the party redeeming must provide an affidavit (provided by the county treasurer) indicating their right to redeem the tax sale.

After the tax sale, investors may pay subsequent taxes that become delinquent on properties for which they own tax sale certificates. The treasurer’s office will not accept payments for subsequent delinquent taxes from investors until fourteen days after a tax installment becomes delinquent. Subsequent delinquent taxes paid by the tax sale investor significantly increase the dollar amount necessary to redeem the tax sale.

A tax sale must be paid (redeemed) in full by an individual who has an interest in the property. Partial payments for redemptions are not accepted by Iowa law. The treasurer collects the redemption or payment from the owner or other interested party, and then reimburses the investor for his/her original investment plus accrued interest. The amount sold at tax sale accrues interest at the rate of 2% per month from the date of the sale until the tax sale is paid in full. Any portion of a month is considered a full month. In addition, subsequent tax payments accrue interest at the rate of 2% per month, beginning with the month the subsequent taxes are paid by the investor until the tax sale is paid in full.

If the tax sale remains unpaid after the statutory payment period, the investor may begin the process of obtaining a tax sale deed to the property. The investor must first serve notice by regular and certified mail to those individuals or institutions with an interest of record in the property. The notice communicates to those served that they have ninety days to redeem the tax sale before a tax sale deed will be issued. After the tax sale, the investor files an affidavit with the treasurer’s office stating service has been completed. Property owners then have ninety days to redeem (pay in full) the tax sale to avoid losing their property. However, if the investor fails to file the affidavit within three years from the date the tax sale certificate was issued, the county treasurer cancels the tax sale lien.

If the tax sale is not paid in full (redeemed) during the final ninety-day payment period, the investor may request a tax sale deed to the property. Redemption funds must be in the physical possession of the county treasurer on or before the ninetieth day. A tax sale deed transfers ownership of the property, including all the right, title, interest, and estate of the former owner, to the tax sale investor. The investor is required to request the tax sale deed from the treasurer’s office within ninety calendar days after the final ninety-day payment period expires. The treasurer cancels the tax sale lien if the investor fails to request the tax sale deed during this time period.

Where can I get more information?

We strongly recommend you contact your county treasurer who will provide information about the process and explain your rights. You may receive communications from the tax sale certificate holder (the party that paid the delinquent taxes at the tax sale) at various times during the process. We also recommend you contact your county treasurer if you receive any communication from the tax sale certificate holder. The county treasurer will explain the process.

Can I really lose ownership of my property?

Yes, but only if you fail to make payment to the county treasurer within the statutory time period. If a tax sale deed is issued the new deed holder acquires the property free and clear of any recorded liens, i.e., mortgages, judgments, etc.

Need Help?

If you have any questions regarding tax sales contact your county treasurer. If necessary, the treasurer may urge you to seek legal help but in most instances the county treasurer will be able to respond to your questions. Use www.iowataxandtags.gov site to locate your county treasurer.