What happens if third party tenants in Crown properties default on their realty taxes?
A. When the owners of private property do not pay their realty taxes, eventually the taxing authority has the right to register a property for sale to recover unpaid taxes. However, since federal property is exempt from taxation, it cannot be registered for tax sale under any circumstances. Therefore, if third party tenants in Crown property do not pay their taxes, the taxing authority must take other means to recover the taxes. Generally, this involves going to court and obtaining judgment against the tenant. In many instances, taxing authorities have never been able to recoup the loss. This situation changed beginning with the 2000 tax year, as the PILT Act includes a provision for the taxing authority to request a payment in lieu of taxes on that portion of the federal property occupied by the defaulted tenant, after it demonstrates that every reasonable attempt has been made to collect the taxes from the tenant without success.
