Foreclosure in California>Question Details

Emily, Home Buyer in San Diego, CA

is buyer of foreclosed property responsible for property tax liens if not disclosed at time of sale? who is?

Asked by Emily, San Diego, CA Wed Aug 13, 2008

responsible for this error?

Help the community by answering this question:


Hi Emily,

There is a category of taxes called "Supplemental Taxes" that the contract provides for the buyer to pay. Normally, supplemental taxes arise in connection with a sale because the seller's property taxes were less than the buyer's. This is, of course, not necessarily true in today's market. Here is an example:

Seller's taxes: $2500 per year.
Buyer's taxes: $5300 per year (based on buyer's purchase price of $424,000)

For the 1st six to twelve months the county bills the buyer at a rate of $2500/year while they get their records updated. Let's say 10 months later your 1st tax bill comes with a rate or $5300/year.

$2500/year = $208.33/mo. So you paid $2083.30 for those 10 months.
$5300/year = $441.66/mo. Is what your real tax rate was. So you were really liable for $4416.60 for 10 months

In this example the supplemental tax bill would be $2,333.30 ($4416.60 less $2083.30.

The problem is that occasionally the previous owner didn't receive his/her supplemental tax bill before the short sale. The language wasn't meant to make the buyer liable for the old buyer's supplemental tax but that's what the bank and the title company would say.

This is pretty rare & if you take the advice of the others and have the title company run the taxes on the property you're buying you should avoid problems like these.

Good luck,

John Hickey
Dilbeck Realtors, GMAC
1 vote Thank Flag Link Sat Aug 16, 2008
Dear Emily,
In Texas the Seller is responsible for past taxes and they are paid at the time of sale. The buyer is only responsible for new taxes after closing. Check with a local tax pro to verify the details in California. Good luck!
Betina Foreman, Realtor
Austin Texas
0 votes Thank Flag Link Tue Dec 16, 2008
Hi, Emily. I believe that Monique is correct. In California I don't believe a lender would finance a new loan unless all past liens are taken care of. Again, you should consult a real estate attorney on this one.
Web Reference:
0 votes Thank Flag Link Thu Aug 14, 2008
Hello Emily,

When a property is transferred to the new owner it should be free of encumbrances. Check with your title company as most lenders would not write a loan to you unless the past property taxes were paid by the bank or prior owner. If you are already in escrow call escrow and make sure this is so. If you have already closed escrow check your HUD1 closing statement. If you haven't purchased a property yet, make sure when you write an offer that your property is free of past taxed. Usually it is the seller or bank that are responsible for past taxes and not the buyer. Even if they aren't disclosed they should turn up on the title report. I hope this answers your question.


Monique Carrabba
The Reavis Group
Keller Williams
0 votes Thank Flag Link Wed Aug 13, 2008
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