Home Buying in 94587>Question Details

Brandy, Home Buyer in Union City, CA

Who's responsibility to pay unpaid property tax for a short sale house?

Asked by Brandy, Union City, CA Sat Aug 14, 2010

Im buying a short sale house, but there is a $3800 unpaid property tax and the seller doesnt want to pay it. Their agent asked us to pay. Is it possible that we wont get the house if we dont pay the property tax for the seller? Do we really need to pay for him?

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Ruth and Perry Mistry’s answer
Hi Brandy:

When you filed to buy a Short Sale home there is a Net Sheet, that calls out the liabilties sent over to the bank. This short coming of Taxes not being paid should have been disclosed and forwarded to the bank.

If this was properly done the bank/s would have agreed to pay from their proceeds.

Yes, it is possible for you not to get the house.

And no you dont have to pay, that is nonsense.

Your agent should check with the listing agent why this was not disclosed on the net sheet or addressed
when the banks were negotiating the terms with the seller.

Push back or walk away from the home.

Good luck.
Web Reference: http://www.ruthandperry.com
0 votes Thank Flag Link Sat Oct 16, 2010
When buying short sale or foreclosure, we used to run property title search before we make an offer. We should know ahead if the property has any outstanding property tax, HOA lien, mechanic liens or any thing that need to clear before we could close the transaction. I have been using http://www.nextace.com services for all of the tile search and property report.
Web Reference: http://www.nextace.com
1 vote Thank Flag Link Thu Dec 5, 2013
We bought a house in May of 2009, We were told the takes we paid went to 2008 taxes. We did not own the home and are now being foreclosed on because they used what we thought was to a certain yr and went to the yr before. Is this right or even legal? We have to go to court for transfer of deed and I am afraid we will lose everything and be on the street with 2 small kids and a pregnant girl.
0 votes Thank Flag Link Sun Jan 3, 2016
We are in St. Clair County IL. Not sure why it came up with that location.
Flag Sun Jan 3, 2016
How do I buy a property that has been posted in the delinquent property Tax Sale, in Union City, GA.
0 votes Thank Flag Link Thu Jul 30, 2015
It is my understand that it is the responsibility of the bank who is allowing the short sale. However in many cases especially with HUD homes they will not pay any assessments and the buyer will have to take them on.

Good luck,
0 votes Thank Flag Link Thu Dec 5, 2013
Hello Brandy,

Without knowing the details of your particular situation. The seller will not normally pay for property taxes in a short sale because they are loosing the home. Once the bank approves the sellers short sale, property taxes should have already been taken into account. When you submitted the offer to the seller the listing agent should have calulated the net figure to the bank based on the terms of your offer. If the sellers agent did not submitt an estimated HUD-1 along with your offer then this might have been missed. Please consult with your agent or with an attorney.
0 votes Thank Flag Link Sat Oct 16, 2010
Hello Brandy,

Having done numerous short sales both on the seller side and buyers side, this is a negotiable issue. But it really depends on how far into the transaction you are, also which bank your dealing with makes a lot of difference. In a short sale, the seller will not be willing to pay for anything, they are already suffering losing a home so they just want to get this done with. Ask the bank, and if they dont' pay, think about how much you really like this home, and does $3800 really make that big of a difference. The listing agent may have other offers they can accept if you become too demanding. Make sure you are working with a knowledgable Buyers realtor who can get you the best deal possible. Good luck. :)

Kamal Randhawa
0 votes Thank Flag Link Sun Aug 15, 2010
Hi Brandy:

Unpaid property tax should have been figured in prior to sending the package to the lenders to be approved, then the lender/investor would have know how much loss they have to take before approving the sale. That would have been the ultimate time to negotiate these kind of payments.

If the agent has not yet turn in the short sale package, then it can be added in before the package is turned in. If they have already sent it in but the short sale has not been approved (or not sent in to be negotiated by the negotiator), then the listing agent might add this in to be negotiated. If this has already been approved, and you are in the middle of escrow, you can still try to go back and negotiate, the chances are lower now to be settled.

Most of the lenders will pay unpaid property tax, so you should ask them to try to negotiate for it.

Good luck!

Sylvia Barry
Marin Realtor
0 votes Thank Flag Link Sun Aug 15, 2010
Sylvia Barry,…, Real Estate Pro in Marin, CA
The lender may pay it to make the deal work. I would try that route. The seller probably does not have the money. I have had banks pay repairs, fines, etc. when a seller lacked the funds to do so.
0 votes Thank Flag Link Sun Aug 15, 2010
Deborah Madey, Real Estate Pro in Brick, NJ
If the seller is unwilling to pay them, then another option is to ask him/her to take a promissory note for them, and to get that lien removed from the property. Yet, if the seller is unwilling to do that, then have him/her to get his/her lender to pay for them.
0 votes Thank Flag Link Sun Aug 15, 2010

The first thing to look at is your contract and what you put down as show is responsible for what costs.

The second thing to look at is the short sale approval and what terms are costs are allwoable and permissable.

The third thing to look at is the big picture. Is the $3800 make a difference in the greater scheme of things.

Your agent should step up here and go to work.
Web Reference: http://bob2sell.com
0 votes Thank Flag Link Sun Aug 15, 2010
Usually the seller is responsible
0 votes Thank Flag Link Sat Aug 14, 2010
The bank/lender will normally pay the unpaid taxes but it would have to show up on the closing statement otherwise the property will convey without them being paid. I have yet to have that happen as the lender and the title company both do thorough searches. I have had a lender who was unwilling to pay the back taxes so the buyer agreed to do so.
0 votes Thank Flag Link Sat Aug 14, 2010

You can probably take ownership of the house without paying the property tax at this time but the outstanding balance will remain as a lien against the house. Property taxes do not go away when a house changes hands. Penalties will also continue to accrue if the taxes are delinquent.

I would expect the seller’s lender to pay the taxes. The seller will not. Don’t expect the seller to pay back taxes for a house that they are losing. If the lender will not agree to pay the taxes and you back out the next buyer will expect the lender to pay the taxes.

What does your agent say?
0 votes Thank Flag Link Sat Aug 14, 2010
Hi Brandy, you have very good answers below that address your primary question; however, you still must make an important decision.

In making the decision on how to proceed, and assuming your Agent submitted the CAR Short Sale Addendum (SSA) as part of your offer, be aware Paragraph A states:

"This Agreement is contingent upon Seller’s receipt of written consent from all existing secured lenders and lienholders (“Short-Sale Lenders”), no later than 5:00 P.M. on [enter date] (“Short-Sale Contingency Date”), to reduce their respective loan balances by an amount sufficient to permit the proceeds from the sale of the Property to pay the existing balances on loans secured by the Property, REAL PROPERTY TAXES, brokerage commissions, closing costs, and other monetary obligations the Agreement requires Seller to pay at Close Of Escrow (including, but not limited to, escrow charges, title charges, documentary transfer taxes, prorations, retrofit costs and Repairs) without requiring Seller to place any funds into escrow or have any continuing obligation to Short-Sale Lender. If by the Short-Sale Contingency Date, either: (i) Seller does not receive Short-Sale Lenders’ written consent or (ii) Seller fails to give Buyer a copy of Short-Sale Lender’s written consent then either Seller or Buyer, respectively, may cancel the Agreement in writing, and Buyer shall be entitled to a RETURN OF ANY DEPOSIT. Seller shall reasonably cooperate with existing Short-Sale lenders in the short-sale process." {Capitalization added by poster}

I am not a lawyer, so if you checked the CAR Contingency Removal (CR) form box stating “All buyer contingencies are removed, EXCEPT” without listing the SSA I’m not sure how that would affect your options.

Best, Steve
0 votes Thank Flag Link Sat Aug 14, 2010
Brandy, the seller/lender typically pays for delinquent property taxes in short sales. I have not seen it to be required to be paid by the buyer in all my short sales. The HUD-1 will show that property taxes are paid the lender and that assures you that the property conveyed to you has no tax liens.

In remote cases, if the 'new proceeds' to the seller/lender is below their minimum required for approval, the buyer may be asked to pay. If you want this house so bad, you could contribute to the transaction by paying the property taxes.

I'm always available for your questions.

Jane Pacheco
0 votes Thank Flag Link Sat Aug 14, 2010
Hi Brandy, Pacita had a great answer I just want to add that I too have never had a problem with the bank paying for property taxes that are the seller may not have paid. Like Pacita said wait until it is a last resort and if the home is still a great price and you feel it is worth it....Good Luck! ....Dawn
Web Reference: http://DawnRivera4Homes.com
0 votes Thank Flag Link Sat Aug 14, 2010
Sounds like NEITHER agent is proficient in short sales if the agents and the seller are asking you, the buyer, to pay for unpaid property tax. What did your agent tell you?

I have yet to run into a short sale where the seller's lender did not approve a short sale and give enough funds to cover unpaid taxes along with the bulk of selling expenses. What lenders typically may not pay are delinquent HOA fees and fines and other HOA associated expenses. Unpaid taxes are liens against the property and most short sale lenders would take care of it.

In some situations, if the HUD statement shows a shortfall after computing what the short sale approval $$ will cover, then the buyer, the seller and even the agents may be asked for contributions towards the shortfall. Only when you know for sure that there will be a shortage should all parties negotiate their respective contributions, IF AT ALL!

If you really want the house, and if it's below market comps, and if it looks like you are still going to get a very good home at a very good price, you may want to contribute towards payoffs of the loan and/or delinquent taxes. to seal the deal. but that's a last resort.
0 votes Thank Flag Link Sat Aug 14, 2010
The property tax on a short sale is normally paid by lender of seller. It has to show on the closing statement the listing agent sends to the bank with the offer that comes from buyer.
In case the bank does not want to pay it, then it is negotaible that either seller or buyer pay it or split it. But on all my short sales the bank paid for it.

Heba Rayan 925-216-3006
0 votes Thank Flag Link Sat Aug 14, 2010
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