Behind on property taxes? A new law may save your home from auction in this state

New law protects homeowners from tax sales

Maryland changed the rules on how counties can sell off tax debt on homes. House Bill 59 took effect on Jan. 1, 2026, after Gov. Wes Moore signed it last April.

The law passed the House of Delegates 139 to 0. The Department of Housing and Community Development requested the bill, and the Ways and Means Committee introduced it.

It raises the minimum debt before a home can go to auction and extends new protections to families living in inherited homes.

Tax sales put homes at risk over small debts

Here’s how tax sales work in Maryland. When a homeowner falls behind on property taxes, the county can auction off that unpaid debt.

A private investor buys a tax lien certificate, which is a claim on the debt, not the house itself. The homeowner keeps the home but has to pay back what’s owed plus interest and fees.

If they don’t pay in time, the investor can go to court and take ownership. Families have lost homes over surprisingly small amounts of unpaid taxes.

The threshold rises and goes statewide

Counties across Maryland now have to hold back owner-occupied homes from tax sale when the total debt sits below $1,000.

Before this law, only Baltimore City offered that kind of protection, and the cutoff there was just $750. HB 59 takes that safeguard statewide and bumps the dollar amount up.

If you own and live in your home and owe less than $1,000 in back taxes, the county can’t put your home up for auction.

Inherited homes get new protections too

The law also covers people living in homes they inherited but never got a formal deed for. These situations go by “heirs’ property” or “tangled title.”

When someone dies without a will, the home often passes to the kids or grandkids informally.

Without a deed in their name, those family members can’t access tax credits, repair programs, or other benefits meant for homeowners.

HB 59 now treats heirs living in these homes more like traditional homeowners when it comes to tax sales.

Counties must build property registries

Every county now has to set up a registry where families or the State Tax Sale Ombudsman can list properties that should stay out of the tax sale.

The State Department of Assessments and Taxation helps counties create and run these registries. The idea is to flag homes that qualify for protection before they ever hit the auction block.

Maryland has never had a statewide system like this before, and the fiscal and policy note for HB 59 lays out how the registries will work.

Interest rates drop and water bills can’t trigger sales

The law caps redemption interest rates on owner-occupied homes at 10% per year. Before HB 59, counties set their own rates, and some charged as much as 18% a year.

That’s a big difference for a family trying to dig out of tax debt.

The law also stops counties from sending a home to tax sale when the only unpaid bill is for water and sewer charges. Both changes lower the cost of catching up on what’s owed.

Heirs now qualify for a state loan program

Maryland runs a Homeowner Protection Program that can pull a homeowner out of the tax sale process for up to three years. It gives families time to set up a payment plan and connect with support services.

Before this law, only people with formal deeds could enroll. Now, heirs living in inherited homes qualify too.

The program requires a household income below $60,000 and a home value of no more than $300,000.

Tangled titles leave families vulnerable nationwide

Heirs’ property happens when someone dies without a will and the home passes informally to the family. Without a clear legal title, the family can’t get loans, access tax relief, or qualify for many government programs.

That leaves them exposed to rising tax bills and, eventually, losing the home in a tax sale.

The problem shows up across the country but hits hardest among Black families in the South and in older urban neighborhoods.

The racial wealth gap makes it worse

Research from the Economic Policy Institute, the Federal Reserve Bank of Atlanta, and the Urban Institute shows heirs’ property hits Black families the hardest.

Federal Reserve data shows Black families hold about one-tenth the median wealth of white families. Economists estimate involuntary land loss has cost Black families billions of dollars since 1910.

In Maryland, the legal aid group MVLS found that tangled titles widen a wealth gap of nearly ten to one between white and Black families.

Advocates say the law has real gaps

The Maryland Volunteer Lawyers Service, which runs the state’s Tangled Title Program, points out that heirs’ property is a problem of missing paperwork.

There’s no reliable way to find these properties across the state.

In practice, only families who already have a lawyer are likely to benefit from the new protections. MVLS says the Homeowner Protection Program now serves fewer than 20 families statewide.

The law also only applies going forward and doesn’t cover tax sale certificates issued before Jan. 1, 2026.

Families should act now to get help

If you live in a home you inherited, contact your county tax office and ask about the new registry. The State Tax Sale Ombudsman can walk you through the Homeowner Protection Program.

Legal aid groups like MVLS offer free help with tangled title problems for families who qualify. The single best way to prevent heirs’ property issues is estate planning, starting with a will.

HB 59 doesn’t end tax sales. It raises the bar for when they happen and gives families more time.

The bill passed unanimously but advocates push for more

HB 59 got backing from both parties and won support from the Maryland Association of Counties with amendments. Advocates and legal aid groups call it a meaningful step but not a full fix.

More legislation from the 2025 session, including HB 790, makes tax collectors share information about installment payment programs with homeowners.

Lawmakers and advocates keep pushing for more funding and wider outreach to reach families who don’t know what help is available.

This article was created with AI assistance and human editing.

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