REO Property with Past Due Taxes

bucgravyJanuary 28, 2009

Hello,

Thanks in advance for any information provided.

I am planning on attending an auction for bank owned properties in Tampa, Fl on Feb 7th. The house I am interested in has deliquent taxes for 2007 and unpaid taxes for 2008. There is not a tax lein on the property, I don't think enough time has passed yet. Is the bank that now owns the property responsible for the taxes or would I have to pay them if I am the winning bidder?

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muddypond

The owner of the property when the taxes came due is responsible, but the tax lien is on the house. As I understand it, as a buyer you would have little choice but to pay the past due taxes, but in theory could sue the prior owner to recover your expenditure. Good luck on that.

Ask an attorney to be sure.

    Bookmark   January 28, 2009 at 6:35PM
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brickeyee

Title cannot be transferred without clearing the lien.

The bank will have to pay at settlement.

    Bookmark   January 28, 2009 at 6:58PM
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berniek

Here, taxes are paid in arrears.
If the owner/banks owns the property, they have to pay the taxes up to the date of ownership/closing. When you close on the property, the previous owner/bank will give you a credit for all the taxes when they owned the property (tax proration).
When the taxes are due in the following year, you, the new owner is responsible for ALL previous years taxes, since the bank gave you their part at closing.

    Bookmark   January 28, 2009 at 6:59PM
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brickeyee

"When the taxes are due in the following year, you, the new owner is responsible for ALL previous years taxes, since the bank gave you their part at closing."

The important point is that you will not be paying them.
The bank will have provided the money if they did not actually pay them.

The new title insurance policy will exclude the lien (and any back taxes) if they have been paid (non-issue) or if you are given money to pay them.

    Bookmark   January 28, 2009 at 9:26PM
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berniek

"The bank will have provided the money if they did not actually pay them."

Here, where I live, RE taxes can't be pre-paid, they have to be paid when due.
Maybe other locations operate differently. Consult your closing agent as to local customs.

    Bookmark   January 28, 2009 at 11:53PM
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muddypond

Unlike some states, title can be transferred in Florida without bringing the ad valorem (property) taxes current. The owner is not required to pay them in order to transfer title. However, transfer taxes on the title and mortage (if any) must be paid. These are separate and distinct from the ad valorem tax.

Normally, closing agents will arrange for all taxes to be brought current at closing. This is usually in the written contract and is in the best interest of the buyer and will done automatically.

In the case of a bank owned home with unpaid taxes being sold at auction, all bets are off. Check the terms of the autction.

    Bookmark   January 29, 2009 at 7:59AM
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bucgravy

Thanks for responding.
The auction company said the purchase agreement will be posted on their website soon and will cover this topic.
I reviewed purchase agreements for other auctions they have held and it does look like the seller will pay all taxes incurred prior to the closing.

    Bookmark   January 29, 2009 at 8:20PM
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berniek

Here, when a property that has taxes owed in arrears to the Treasurer, it can't be transferred with a deed, unless all taxes due or overdue have been paid at closing. This is regardless of who owns the property, an individual or a bank.

Even when a property is sold at the courthouse steps in a tax lien sale, the Treasurer requires that: "before issuance of a tax deed, all processing expenses, subsequent taxes, special assessments and liens collectible by the Treasurer must be paid."

    Bookmark   January 29, 2009 at 9:32PM
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santosh_salvi777_yahoo_co_in

If an individual in US purchase REO property from bank, then new taxes for the property would be lower or higher. As per
my understanding property taxes would be lower as ownership of the property will be converted from non-home property to
home property (residential).
But still need your views on refer query.

    Bookmark   September 17, 2011 at 7:03AM
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brickeyee

"As per my understanding property taxes would be lower as ownership of the property will be converted from non-home property to home property (residential)."

There are so many property taxing jurisdictions in the US that no blanket statement can be made.

Some have basic rules set out by state law, but are still allowed to create their own policies for taxing as long as they do not violate ht estate laws.

Some jurisdictions will not lower the assessment after a forced sale since it was not a 'willing seller and willing buyer' transaction.

Some places require that neighborhood averages be used in valuation, not individual sales prices.

    Bookmark   September 18, 2011 at 11:35AM
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