The city mails Roger his property tax bill on July 1.
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But what if Roger can’t pay the whole tax bill by the end of the year?
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In February, the city mails Roger a final bill. He owes $750 plus monthly interest charged by the city.
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But suppose the sewer backs up into his basement, and Roger has to pay the emergency plumber instead.
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By mid-May, Roger still can’t pay, so the city auctions his tax debt to investors at the annual tax sale.
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Investors buy Roger’s debt, called a “tax certificate,” and begin charging 12% annual interest.
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To save his property, he has to pay the investor the $750, plus accrued interest and attorneys’ fees.
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Roger still can’t pay by July 1, and another year of property taxes are added to his bill.
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Nine months after they buy Roger’s debt, the investors can file a lawsuit to foreclose on his property.
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To stop from losing his house, Roger has to pay the full amount he owes to the investors.
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If Roger can’t scrape the money together, he will lose his house and all of its equity to the investors.
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