A forced sale of property occurs when someone is required to sell their home or commercial real estate against their will, usually because of unpaid debt, legal disputes, or tax issues.
Unlike a voluntary sale, which the owner controls, a forced sale is ordered by a court, lender, or government agency to recover the money they’re owed. These situations usually begin with a legal action, and the property is often sold at auction or through a court-appointed process.
The reason behind the sale may vary. Some forced sales stem from mortgage foreclosure, others from unpaid property taxes, or legal disagreements between people who co-own property.
The property often sells for less than its fair market value, especially when sold under tight deadlines or in a distressed market.
What Causes a Forced Sale?
There are a few key reasons why a court or creditor might force the sale of property.
Foreclosure: One of the most common reasons is foreclosure. When mortgage payments are missed for too long, lenders can begin legal proceedings to recover their money by selling the property.
Unpaid property taxes: Another common cause is unpaid property taxes. When taxes go unpaid, the county or local government can place a lien on the property and eventually initiate a sale to collect what is owed.
Ownership disagreement: Forced sales also happen when people who share property ownership disagree on what to do with it; often called a tenancy in common (TIC). This frequently results in a partition by sale, where a court orders the property to be sold and the money divided between the co-owners.
Disputes over inherited property, business partnerships, and divorce settlements can all lead to a court-ordered property sale.
How the Forced Sale Process Works
Step 1
The forced sale process typically begins when a creditor, local tax authority, or co-owner files a legal request for the sale. If specific legal requirements are met, a judge reviews the case and approves the order.
Step 2
After that, the property is put up for sale, often through a public auction. In some cases, a real estate agent may handle the listing under court direction.
Step 3
Once the sale is complete, the purchase price is used to pay off debts, taxes, or legal claims. If any money remains, it goes back to the original owner.
Note that owners often have little control over the sale's timing, terms, or price. They may not be able to set conditions, nor receive as much as they would in a traditional, open-market transaction.
How To Prevent a Forced Sale
Most forced sales don’t happen overnight.
They often start with missed payments, tax issues, or long-standing disagreements. That means many can be avoided with the proper steps early on.
One of the biggest risks for property owners is falling behind on property taxes, especially those with non-homesteaded properties.
Unlike homestead properties, commercial properties usually don’t have caps or exemptions that keep tax increases in check. That’s why it’s essential to review property tax assessments every year. If the assessed value seems too high, owners can file an appeal to lower it.
Keeping up with mortgage payments is just as critical. If a property is financed and the owner falls behind, lenders can begin foreclosure, often leading to a forced sale. Anyone facing financial hardship should contact their lender as early as possible.
In some cases, refinancing or a payment plan may be an option!
For co-owners, like siblings who inherit a house or business partners with investment property, clear communication is key. Disagreements over what to do with the property can lead to a partition by sale, where a court orders the property to be sold.
Co-owners should try to agree on a buyout, refinance, or sale on their own terms before involving the courts.
Staying organized with paperwork also matters. Property owners should make sure their legal title is accurate, their ownership status is up to date, and any active liens or disputes are handled promptly. Minor errors or missed details can cause significant problems down the line.
What To Do if a Forced Sale Is Already in Motion
If a forced sale has already been ordered, there’s still likely time to act.
1. Find out why the sale is happening: Start by figuring out what’s causing the forced sale. Is it unpaid property taxes, missed mortgage payments, or a disagreement with a co-owner?
2. Don’t ignore any notices: Forced sales move quickly and follow strict deadlines. Read all notices from a court, lender, or the county carefully and respond promptly. Waiting too long can make things harder to fix.
3. Read all legal paperwork closely: Any documents the owner receives — like letters from the court or tax office — will explain what’s happening and their rights. Owners should ensure they understand what those documents say before taking action.
4. Talk to a real estate attorney: An attorney who knows property law can help protect the owner’s rights. They can also speak on the owner’s behalf and possibly delay or stop the sale.
5. Ask about repayment or tax relief options: If the sale is happening because of unpaid debt or taxes, the owner should ask if payment plans or tax exemptions are available. They might also be able to appeal the property’s assessed value to lower the bill.
6. Work with co-owners if possible: If the property is co-owned, the owners should try to agree on a plan, like one person buying out the other or selling the property together. Settling it this way can keep the matter out of court.
7. Follow up if the property is sold: If the sale happens, check how the money is being used. After debts and fees are paid, the owners might be entitled to some of the leftover funds.
Protecting Real Property Starts With Smart Planning
No one wants to be forced to sell, whether they own a home, a rental unit, or a commercial building. With the right tools and support, property owners can reduce their risk and stay in control of their real estate investments.
Understanding how the forced sale process works, its legal implications, and how to meet all legal requirements can help avoid unpleasant surprises.
More importantly, staying ahead of property taxes and assessments gives owners more control over their financial future.
Ownwell has helped hundreds of thousands of property owners lower their tax bills by securing exemptions and filing successful appeals. Since 2021, we’ve won over 240,000 appeals.
Get an assessment today at Ownwell.com and learn how much you can save.