Foreclosure in La Puente>Question Details

Vicki Brown, Real Estate Pro in La Puente, CA

Must a Lender pay the back property taxes on a foreclosed property prior to reselling the property?

Asked by Vicki Brown, La Puente, CA Mon Dec 28, 2009

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Yes! The government always gets paid!

In a foreclosure the property taxes in arrears that were the responsibility of the original homeowner come before the banks leins and are paid first in a foreclosure or trustee sale. Then the bank, then if there are proceeds left, second mortgages and then other leins. The next buyer buys the home with clear title.
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1 vote Thank Flag Link Mon Dec 28, 2009
In our area, yes the back taxes are paid and the current taxes are prorated based on the day of closing.
0 votes Thank Flag Link Sat Mar 10, 2012
Trying to research this, I could not come up with a black and white answer:
It may depend on your County,
It may depend on whether the County did indeed file a lien on the property; bureauacracies are noted for not filing paperwork and if they did not file a lien, they may be able to attach/sue the homeowner as a private, unsecured debt. (I know of this happening.)

You know what you need to do.
0 votes Thank Flag Link Sat Mar 10, 2012
All seller closing costs to include property taxes, are subject to the lenders approval. Most lenders do pay property taxes that are in arrears when processing a short sale.
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0 votes Thank Flag Link Sat Mar 10, 2012
When sending a REO lenders make sure taxes are up to date as long as they know what is outstanding. You as a buyer or buyers lender should have a title company check the outstanding taxes to ensure they are up to date at the closing. The reason taxes may not be paid is because the loan was a non escrowed, the loan was coded incorrectly or internally the bank has made a decesion to pay taxes manually and the taxes were not paid. Other times when lenders acquire loans from other servicers there can be some issues with the converting of the loans creating issues such as the taxes not being paid.

But either way at the closing the taxes should be brought current at the time of the closing between the bank and the buyer.

Keith Manson
First Weber Group
Certifed Distressed Property Expert
Metro Milwaukee
0 votes Thank Flag Link Mon Dec 28, 2009
Title must be clear of all liens.

Technically the lender needs to pay the property taxes and satisfy any other liens BEFORE they can obtain title to the property.
0 votes Thank Flag Link Mon Dec 28, 2009
Keith Sorem, Real Estate Pro in Glendale, CA
To add to Bob's comments, banks generally keep taxes current-even when the homeowners stop paying their mortgage.

The only time back taxes accrue on a property in foreclosure is when the homeowner's mortgage was set up so that the homeowner pays the taxes them self.
0 votes Thank Flag Link Mon Dec 28, 2009
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