The Tax Foreclosure Timeline
In New York, the tax foreclosure process begins when property taxes go unpaid. Counties follow different timelines, but generally, after one to three years of delinquency, the county initiates foreclosure proceedings. You receive notice and have a redemption period during which you can pay the outstanding taxes (plus interest and penalties) to halt the process.
The critical point: once the foreclosure is finalized and the county takes ownership, you lose all equity in the property. A home worth $300,000 can be lost for $15,000 in unpaid taxes. Selling before this point preserves your equity — the sale proceeds pay the tax debt, and you keep the remainder.
Steps to Sell Before Foreclosure
Act as soon as possible — the earlier you begin, the more options you have. Contact your county tax office to confirm the exact amount owed and the status of any foreclosure proceedings. Engage a real estate agent to list the property quickly. Price competitively to attract a fast sale — time is not on your side.
If the property cannot sell before the foreclosure deadline, you may be able to negotiate a payment plan with the county to extend your timeline. Some counties will accept partial payments or installment agreements. Your attorney can negotiate these arrangements on your behalf.
What to Do with the Proceeds
At closing, the delinquent taxes (plus interest and penalties) are paid from the sale proceeds before you receive your net. The title company handles this disbursement. Any remaining proceeds after taxes, closing costs, and mortgage payoff are yours.
For many homeowners in this situation, the net proceeds represent significant preserved equity that would have been lost entirely to tax foreclosure. Even a quick, below-market sale preserves far more value than losing the property at a tax auction.