Q: I bought a foreclosed home in July 2008. I just received a letter from the county threatening me with taking my land due to unpaid taxes from 2006. Do I have to pay these?
A: You might have to pay these back taxes. If you bought the house subject to all liens (known or unknown), you might well owe these real estate taxes.
Unknown liens are a huge danger for those home buyers purchasing foreclosures and short sales. With foreclosures, the bank supposedly takes back the property, satisfies all the liens, and then resells the property with “clean” title.
With a short sale, the buyer may purchase a property subject to all liens and matters that may affect the title to the home. In some cases, a buyer in a short sale could be responsible for the payment of unpaid real estate taxes, contractor’s liens and homeowner associations fees and dues.
Frequently, buyers of foreclosed homes buy them on their own without the assistance of an attorney. In some cases, they buy these homes without purchasing an owners title insurance policy. A buyer of a foreclosed home must make sure that they obtain good title to the home they are buying. They must make sure that all prior unpaid real estate taxes have been paid or satisfied. They must also make sure that there all other claims against the property have been wiped clean in the foreclosure.
People often don’t understand the difference between a short sale, a foreclosure and an REO (real estate owned) property.
In a short sale, the seller is a person that is selling the property for less than what he or she needs to satisfy all of the costs of the sale, including paying off the lender. If you buy a short sale and are not careful you may find yourself buying the home and having to pay expenses that were unpaid by your short sale lender.
If you buy a foreclosure, you should be buying the home at the courthouse steps and may have to clean up title issues that were unresolved in the foreclosure. A foreclosure generally wipes the slate clean of most liens and other matters that affect the title to a property. A foreclosure will generally not get rid of easements and other agreements that affect a home, but will get rid of mortgages and other claims of lien that affect the home, including money owed to homeowner’s associations.
However, in some cases, real estate taxes are not wiped out when a property goes through foreclosure. If you are buying a foreclosure, you must know what can and will affect the title to the home you are buying.
Finally, an REO property is a property that generally has gone through foreclosure and is now owned by the bank. You should treat an REO property in the same manner as a property owned by a seller, but you should make sure that all fees and expenses have been paid by the bank from the time they took title to the property through the date of your purchase. In addition, you’ll want to make sure that all real estate taxes are current on the home.
Did you hire your own real estate attorney (not the one hired by your lender) to go over the details of your purchase and help negotiate? If you did, go back to him or her and have a discussion about this issue and find out what you need to do to resolve it.
If you didn’t hire an attorney previously, you may need one now. Just know that if the taxes did not get paid and the lender in the foreclosure did not have an obligation to pay them, you are going to have to pay them. Get moving, because it’s possible that the county will sell your home for back taxes owed very soon.
Good luck.
So previous owner has no responsibility to inform buyer of back taxes and buyer just has to pay them then ???
So how can people break the law and sell someone a home that could have 2 or 300 thousand back taxes for you to pay ? Thats like knowing you have aids and deliberately giving it to others …
It’s a great question. First, while you are required to pay property taxes, it’s still buyer beware when you purchase a home. The process of foreclosure is designed to get rid of all of those issues, but in the Great Recession, not all foreclosures brought the property taxes up to date. It’s worth being aware of it, especially is the lender (REO company) doesn’t stipulate in writing that all back taxes have been paid. My best advice: Make sure you know what you’re getting and what you’re paying for. And, be sure to buy owners title insurance.
So what do you do if another bank oays your taxes then attemots to collect from you all back taxes paid? Am i obligated cause they screwed up?i have a paper that was prorated and i paid my part. Then this year the bank paid the taxes before i could. I never asked and do mot have a Morgatge. Am i obligated to pay them because they billed me for 3 yrs back