You should consult with your agent and lawyer prior to writing any checks. I, personally, would not pay them a dime. Usually, any current or back taxes are taken care of at closing. Also, what if they lenders do not accept the contract? Then, you are out the money you paid for taxes. Out of curiousity, who asked you to pay these taxes?
I wish you luck with purchase.
I have been representing clients both on the buy & sell side of short sales and NEVER has a client been asked to pay for the back taxes. These are usually paid for by the sellers lender/bank.
Regardless of what they are trying to achieve you should not be "put in the middle" of their inability to work/negotiate this deal. Do you have a real estate attorney involved? Make sure you get one that specializes & is well versed in working with short sales.
It "appears" as though you are being asked to pay off the second mortgage under the guise of taxes. If you need a recommendation for a real estate attorney let me know, I will gladly give you the name of the guy I work with on 98% of my short sale deals.
Good luck to you!
First, anything is possible in a short sale. I do tons of them on the listing and selling side...but mostly the listing side. And one thing I know....is that we don't know what the banks will require to get the deal or or what they'l ask someone to contribute...and if the seller can't do it, they'll ask you. Here's what I say, if the deal is right, take it. But.....
Second, I am confused as the why you'd be paying the second mortgage for taxes...typically, the first would cover those because they are the ones who stand to lose the most in a tax sale.
Third, I'd need a clearer picture to answer appropriately and something tells me I don't have all the information above. Best thing you can do is consult your attorney. If you don't have one...get one and fast. In a short sale, you need just as much protection, if not more, as in a regular transaction.
I am a real estate attorney in the Chicago area. From your brief description of the situation it is tough to truly tell what is going on, but here is what I am betting has happened.
In a shortsale the Seller (probably the Seller's attorney) has negotiated with the bank to take less than the full amount due to them. What it seems like is happening here is that the 1st mortgage lender is only allowing the 2nd mortgage lender to get a certain amount from the sale (lets say $3,000.00 in our example). But the 2nd lender isnt willing to allow the shortsale to go through for that amount. They are requesting more. In this case they are coming to you as the Buyer and asking for a "Buyer Contribution" towards the amount that the 2nd lender will take.
I would be cautious of this happening outside of closing, but if it is on the Settlement Statement (the financial summary of the transaction), then it is disclosed to all parties (to include the first mortgage company), and you should be in the clear. The real question here is are you willing to do it? You will have to bring more money to the closing.
Hope that helps,
You should not have to pay anything to the sellers/seller's lender prior to closing. Talk to your agent or attorney about this. Do not pay anything before you consult with an attorney.
American International Realty
They can legally ask for whatever they want. Is it illegal for you to pay - no - likely not.
The problem is if the extra money is not disclosed on the HUD. If you want to pay - make sure it is on the hud.
Big controversy over this right now.