Home Buying in 60657>Question Details

John, Home Buyer in Chicago, IL

I am buying a shortsale. Is it legal to be asked to pay the realestate taxes of the seller for the last year and a half?

Asked by John, Chicago, IL Tue Mar 23, 2010

I am supposed to write a check to the sellers 2nd mortgage lender bank for the taxes and this amount is not supposed to be added to the contract price. Is all this legal?

Help the community by answering this question:


They can ask for anything. You have no reason at all to agree to it.
0 votes Thank Flag Link Tue Mar 23, 2010
John first get yourself a Realtor® to help you. Second tell them to put the taxes on the HUD-1 so you can claim them and see what they say! Then tell them B*** S*** everything must be on the closing statement. You are going to have to sign a statement in front of a notary that there are no undisclosed parts of the transaction.
Web Reference: http://www.Find1Home.com
0 votes Thank Flag Link Tue Mar 23, 2010
Hi John,

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.

Cherrie Catama
Newman Realty
0 votes Thank Flag Link Tue Mar 23, 2010
You would be entitled to request any portion of the taxes paid by the seller for the period of time you did not own the property. Absolutely it's done and you would be entitled to some increased percentage above the most recent known tax bill (105-110% depending on when the taxes were assessed for the township you're buying in). That's the good news. The bad news is you may not have any luck getting the lender to agree to this and you almost certainly wouldn't if this were a foreclosure. Consult and agent and an attorney.
Web Reference: http://www.rememberjim.com
0 votes Thank Flag Link Tue Mar 23, 2010
Hi John,

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!
0 votes Thank Flag Link Tue Mar 23, 2010

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.


Web Reference: http://www.footeteam.com
0 votes Thank Flag Link Tue Mar 23, 2010

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,

Paul Garver
Web Reference: http://www.hg-legal.com
0 votes Thank Flag Link Tue Mar 23, 2010
That's crazy! You should really have an agent and attorney when buying a short sale, especially with these issues. Taxes are usually prorated @ 100% by the seller. I think it's very unusual for you to pay that. If you need some assistance with this short sale process, feel free to give me a call.

Danicka Brown
Web Reference: http://www.frankelgiles.com
0 votes Thank Flag Link Tue Mar 23, 2010
Use an attorney and real estate agent. They are there to answer questions like this. If you get yourself in hot water because you decided to cut corners you'll then realize it cost you more to cut corners instead of paying more and getting it done right the first time.
0 votes Thank Flag Link Tue Mar 23, 2010

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.

Mark Malave
American International Realty
p- 773-435-1605
Web Reference: http://www.markmalave.com
0 votes Thank Flag Link Tue Mar 23, 2010
I assume you do not have an agent nor an attorney so you are looking for trouble. Nobody does that and I have never even heard of anyone asking for a buyer to do that!! It's totally bizarre.

0 votes Thank Flag Link Tue Mar 23, 2010
It doesn't sound to me like this is about the taxes. The 1st lienholder will almost always pay back taxes on a property. More likely the second wants more than the first will pay them and the money needs to come from somewhere.

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.
Web Reference: http://www.homesbyminna.com
0 votes Thank Flag Link Tue Mar 23, 2010
It is definately not the normal especially if it is not going to be on the settklement statement. No agent, attorney or closing company should ask you to pay anything up front, especially taxes before teh sale goes through and especially not on the hud. In a short sale the negotiator for the bank is making an offer to tehbank that includes them receiving a net amount which is the amount left offer after your offer price pays all the costs of the sale . You are already paying a sales price so any attempt to get you pay anythng outside teh sales price is for nothing but hiding this amount from the 1st mortgage co or the bank. your buyer agent should be guiding you, if you choose to go it alone seek an attornies advice, something is wrong here.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Tue Mar 23, 2010
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