Unpaid property taxes are a lien on the property, and a buyer won't take the house with that lien attached. So at closing, the title or escrow company gets an exact payoff from the county tax collector and pays it out of the seller's proceeds. You don't need to come up with the money before you sell, as long as the sale price covers it.
Delinquent taxes vs. this year's taxes
Two different things get settled at an Oregon closing, and people often mix them up:
- Back (delinquent) taxes from prior years, plus the 16%-a-year interest and any foreclosure penalty. These belong entirely to the seller and are paid off in full from the seller's side.
- The current tax year. Oregon's tax year runs July 1 through June 30. The buyer and seller split, or “prorate,” the current year's bill by the day of closing. If the seller has already paid it, the buyer credits the seller back for their share; if it's unpaid, the seller's share comes out of their proceeds.
How it works step by step
- Title search. When the sale opens, the title company pulls the tax records and spots any delinquent years.
- Payoff request. Escrow asks the Jackson County (or Josephine County) Tax Collector for a payoff good through the closing date, including interest.
- Settlement statement. The payoff shows up as a line item on the seller's side of the closing statement, along with any mortgage payoff.
- Paid at closing. Escrow sends the money to the county, the lien is cleared, and the seller receives what's left.
A simple example
| Item | Amount |
|---|---|
| Sale price | $300,000 |
| Mortgage payoff | − $140,000 |
| Delinquent taxes, interest & penalty | − $14,500 |
| Seller's share of current-year taxes | − $1,200 |
| Other closing costs | − $3,000 |
| Seller receives | $141,300 |
Numbers are illustrative only. Your actual payoff comes from the county and your lender.
Can the buyer agree to pay the back taxes?
Sometimes. Buyer and seller can negotiate almost anything, and some offers are written as “buyer pays the back taxes” with a lower price. Economically it's the same thing: the taxes are paid out of the deal either way. What matters is your bottom line after everything is paid, so compare offers by net proceeds, not by who is named as paying which bill.
What if the taxes are more than the house is worth?
That's rare with property taxes alone, but it can happen when back taxes stack on top of a mortgage and other liens. In that case the seller would have to bring money to closing, or negotiate with lienholders. If you think you might be close to that line, it's worth getting an exact payoff early. See how fast back taxes grow.
If the county has already started foreclosure
You can still sell. Before the court judgment, the payoff is the taxes plus interest and the 5% penalty. After the judgment you're in the two-year redemption period: you still own the house, and the full redemption amount is paid at closing just the same. What you can't do is wait past the deed to the county — at that point the house is no longer yours to sell.
This is general information, not legal or tax advice, and Rogue Valley Cash Buyers is not affiliated with any county or government agency. Deadlines and amounts depend on your specific account — your county tax collector can confirm exactly what you owe, and an Oregon attorney can advise on your situation.