Can Delinquent Property Taxes Be Paid at Closing in Maryland?

If you owe back property taxes, you do not usually have to pay them before you can sell. The sale itself is how most sellers pay them. What matters is whether the county has already sold a tax sale certificate on the house, because that changes who gets paid, how much, and how fast the amount grows.

Why taxes get paid at settlement

Under Real Property §3-104, a property may not be transferred on the county’s assessment records until all public taxes, assessments and charges currently due have been paid to the tax collector, and the collector’s certificate showing payment is endorsed on the deed. A buyer’s settlement agent therefore orders a tax certification from the county, and the amount due is paid out of the seller’s proceeds at settlement, the same way a mortgage payoff is.

In Prince George’s County, the Treasury Division issues tax certifications. Its general number is 301-952-4030.

What a seller can expect to see on the settlement statement

• Unpaid county and state property tax, plus any municipal tax where the house is inside a city or town
• Interest and penalties on the late amounts
• Other charges billed with the taxes, such as solid waste or front foot benefit charges
• The current year’s taxes, usually prorated between buyer and seller

If a tax sale certificate has already been sold

When taxes stay unpaid, the county can sell a tax sale certificate at its annual tax sale. The owner still owns the house, but the debt now has to be paid by redeeming the certificate. In Prince George’s County, redemption is paid “only to the tax collector,” not to the certificate holder.

The county lists the redemption amount as:

• the total tax sale price, which includes the delinquent taxes, interest from October of the levy year through the month of sale, charges such as trash fees and front foot benefit charges, and an advertising fee; plus
• interest on the certificate; plus
• taxes, interest and penalties that came due after the tax sale.

Prince George’s County’s tax sale site states the interest rate as 20% a year for non-principal residences and vacant lots and 10% a year for owner-occupied homes. The county’s Finance redemption page lists 20%, so check the rate on the certificate itself.

Why waiting costs more

According to Prince George’s County Finance, non-principal-residence properties can be redeemed without paying the holder’s legal fees during the first 4 months after the tax sale, and principal residences during the first 7 months. After that, legal fees can be added once the certificate holder notifies the Treasury Division in writing that they have been incurred. Eventually the holder can go to court to foreclose the right of redemption, which can cost the owner the house and its equity. The Maryland tax sale help guide explains that process and the deadlines.

Steps if you plan to sell a house with back taxes

1. Look up the account balance with the county, or call the Treasury Division, so you know the real number.
2. Ask whether a tax sale certificate has been sold and, if so, request the current redemption amount.
3. Check the title for other liens that will also come out of the proceeds. The Maryland liens and title help guide covers what can turn up.
4. Give the settlement agent the account and certificate details early so the payoff is ready for settlement.

For local tax deadlines and other options in the county, see the Prince George’s County home-selling page.