Most Florida homeowners who fall behind on their mortgage also fall behind on property taxes -- either because they can't afford both, or because their mortgage servicer had been paying taxes from an escrow account that is now depleted. When both obligations go delinquent, two separate legal processes can run simultaneously, and the interaction between them is something every Florida homeowner in default needs to understand.
This guide explains Florida's property tax collection system, how servicers handle tax advances during default, and how delinquent property taxes interact with mortgage foreclosure.
Florida Property Taxes: The Annual Collection Cycle
Florida property taxes are assessed as of January 1 each year. Tax bills are mailed by November 1. Florida provides a discount for early payment under F.S. 197.162:
- 4% discount if paid in November
- 3% discount if paid in December
- 2% discount if paid in January
- 1% discount if paid in February
- No discount if paid in March
Property taxes become delinquent on April 1. After April 1, a penalty attaches under F.S. 197.332. On or before May 31, each Florida county holds a tax certificate sale, where investors bid to pay the outstanding taxes in exchange for a tax certificate that earns interest at the winning bid rate (which can be up to 18% per year).
Property Taxes Are Senior to Your Mortgage
Florida property taxes are a first-priority lien on real property under F.S. 197.122. This means property taxes rank ahead of your mortgage lender's security interest. If a tax deed sale were completed -- the final step in the tax collection process after 2+ years of non-payment -- the buyer could potentially take title free of the first mortgage in some circumstances.
This is why your mortgage servicer will almost always advance property taxes, even on a delinquent loan. Allowing a tax lien to grow unchecked would threaten their first lien position.
How Mortgage Servicers Handle Delinquent Property Taxes
Under CFPB Regulation X (12 CFR 1024.17), most mortgage servicers are required to maintain an escrow account for property taxes and insurance. During a default, when the borrower has stopped making payments, the servicer typically continues to advance property taxes and insurance premiums to protect the collateral.
These advances are called recoverable advances or escrow advances. They are added to the total balance of what you owe -- including unpaid principal, accrued interest, late fees, and attorney fees -- in the foreclosure judgment. The total judgment amount is what determines whether there is a deficiency after the auction sale.
If your loan has been in default for 12-24 months, your servicer may have advanced $5,000-$15,000 or more in property taxes (depending on your county and home value), and each advance adds to your total debt. Check your monthly mortgage statements or request a payoff statement to see the total outstanding balance including advances.
The Tax Certificate and Tax Deed Process
After the tax certificate sale in May, the certificate holder holds a lien on your property earning interest at the bid rate. You can redeem the certificate at any time by paying the outstanding taxes plus accrued interest through the county tax collector.
After 2 years (from the date of the tax certificate), the certificate holder can apply for a tax deed (F.S. 197.502). A tax deed application triggers a hearing and eventually a tax deed sale -- a separate property auction process managed by the county. A tax deed sale can extinguish the first mortgage in some circumstances, which is why servicers intervene well before this point.
For properties with active mortgages, the practical sequence is: servicer advances taxes, adds to total balance, and the mortgage foreclosure absorbs the tax advance as part of the judgment. The tax certificate holder is typically named in the mortgage foreclosure lawsuit and their interest is addressed there.
The Florida Property Tax Deferral Program
For homeowners age 65 or older with adjusted gross income of $10,000 or less (under F.S. 197.242), Florida allows deferral of current year property taxes. This does not eliminate the taxes but postpones them, which can reduce immediate financial pressure. The deferred taxes become a lien on the property and must be paid when the property is sold, transferred, or no longer the homeowner's primary residence. This program is rarely available to the typical homeowner in foreclosure but may apply in some senior household situations.
Separately, our guide on the Florida property tax deferral program covers this in more detail.
Homestead Exemption and Property Taxes During Foreclosure
Florida's homestead exemption (Article X, Section 4 of the Florida Constitution) reduces your property's assessed value by $25,000 -- or $50,000 for the non-school portion if the property is worth over $50,000 -- which reduces your annual tax bill. During a foreclosure, the homestead exemption does not provide any protection from the mortgage lender, but it does continue to reduce the annual tax obligation while you remain in the home.
An important note: if you file a change of address or move out during the foreclosure period, you may lose the homestead exemption for the following tax year. See our guide on the homestead exemption deadline during foreclosure.
What to Do When You Are Behind on Both Property Taxes and Mortgage
- Check your servicer's escrow account.Log in to your servicer's portal or request an escrow account history to determine whether your servicer has been advancing property taxes. If they have, these advances are already factored into your loan balance and will appear on a payoff statement.
- Check your county tax collector's website.Look up your property to confirm the current property tax status: current, delinquent, tax certificate issued, or tax deed applied for. Each county's tax collector maintains an online property tax search. Verify the amounts and any certificates sold.
- Contact your servicer for loss mitigation. Engage in the loss mitigation process immediately. Use our foreclosure checklist to track all deadlines and required documents.
- Evaluate your equity position. Use the equity estimator with the total balance including advances, not just the original loan balance.
- Consider a pre-foreclosure sale. If you have equity, a pre-foreclosure sale can pay off both the mortgage and any outstanding tax certificate amounts at closing.
Related Resources
- Florida Foreclosure Process Overview -- what happens from default through auction
- Florida Tax Certificate Sale and Foreclosure Risk -- detailed guide to the annual tax certificate sale process
- Tax Deed Sale vs. Mortgage Foreclosure in Florida -- how the two sale processes differ
- Florida Property Tax Deferral Program -- deferral options for qualifying senior homeowners
- Homestead Exemption Deadline During Foreclosure -- protecting the homestead exemption while in default
- Deficiency Judgments in Florida -- how servicer tax advances affect the total deficiency
- Selling Before Foreclosure in Florida -- paying off taxes, mortgage, and other liens at closing
- Short Sale in Florida -- when you owe more than the home is worth
- HUD-Approved Housing Counselors in Florida -- free guidance on mortgage default and loss mitigation
- Contact Barrett Henry for a Free Consultation -- Broker Associate at REMAX Collective, 23+ years of Florida real estate experience
About the Author
Barrett Henry is a Broker Associate at REMAX Collective and a Florida real estate professional with 23+ years of experience helping homeowners in distress. He works with sellers throughout Tampa Bay and provides referral assistance to homeowners in all 67 Florida counties. This guide reflects general information about Florida law and is not legal advice. Consult a licensed Florida attorney for guidance on your specific situation.
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