Home Buying in Houston>Question Details

Decathlon40, Home Buyer in Houston, TX

Does a tax lien from a 3rd party tax solution company and HOA lien go away when the house goes into foreclosure?

Asked by Decathlon40, Houston, TX Fri Oct 14, 2011

I have an approval from the primary lien holder on a short sale. They just realized there is a tax lien from a 3rd party tax solution company so they are re-evaluating the deal an called off our closing. I'm paying a fair market value for the house and it does need repairs. Just trying to put myself in the lenders shoes to try and predict what the outcome might be.

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Hello Decathlon40,

I'm sure you are overwhelme with all this new information coming your way. If the house goes on foreclosure most likely all liens will go away at the time that bank takes on the deed. It's a complicated process but the foreclose bank will have to deal with. It might take some time to settle all 3rd party liens before the property goes on the market. Once the property comes back on the market, make sure you ask for a title policy from a title company. Most likely bank will give you a limited warranty deed but the title policy will show if there are pending liens on the property. If you are financing this house, your lender will require to have a clean title before they fund the transaction. I know that it's very frustrating but if you have further questions feel free to contact me. Carlos Say at http://www.houstonfirsthouse.com
0 votes Thank Flag Link Fri Oct 14, 2011
Both liens will be paid before lender sees any money. If lender decides to foreclose, both liens will be paid at property sale closing or sooner (tax lien). You are paying fair market value? Then stay the course as far as price offered goes; let bank decide whether they take less now and close your short sale or spend foreclosure related fees and take less money then. Best of luck to you.
1 vote Thank Flag Link Fri Oct 14, 2011
Because the liens are valid and all parties know about them now they must be paid. The lender was planning on netting a certain amount after commissions and fees were taken into account. This lien reduces the amount so the file needs to be looked at again and hey may require the offer to be increased.

I just closed on a short sale listing where we eventually found out there was a $9000 mechanics lien for a new roof that was put on and never paid for. The bank, Chase, stated they would not pay that lien at the price they had accepted. I was able to negotiate the lien down to $1500 and the buyer paid that directly at closing. So in the end it worked out for everybody.

Remember the lender can always pull their approval. Even if nothing changes it can happen. Good luck with your purchase. If you are already paying close to or fair market value you have a better chance of the bank accepting the offer they have already approved. Just know anything can happen. Short sales are not for the faint of heart!

Best of luck to you.

Don Groff
REALTOR® | Mortgage Broker
Keller Williams Realty | 360 Lending Group
o.512.669.5599 m.512.633.4157
1 vote Thank Flag Link Fri Oct 14, 2011
Many more questions require answers for any professional to render and opinion. Your buyers agent should be assisting you . However tax lien issue would have be resolved prior to any closing

Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes Thank Flag Link Fri Oct 14, 2011
First, although a third-party has paid the taxes for the lien, the county government handles the processing of the lien. Second, tax liens are superior to mortgage liens in most jurisdictions. Third, I suspect the primary lien holder intends to protect their position, so they need to make sure that there's enough cash in the deal to cover the back taxes and the minimum amount that they'd be willing to accept.
0 votes Thank Flag Link Fri Oct 14, 2011
Tax liens including from the 3rd party companies are normally superior liens and do not go away at foreclosure.
Impossible to tell what position the lender is in.....so many many factors.
Does the investor have other properties in the neighborhood?
Do they have mortgage insurance?
How far is the buyer behind
and just a million other issues they must calculate.....and even then sometimes it does not seem to matter.
Sometimes what is a good deal for the buyer, seller, lender and all parties involved get thrown out the door, foreclosure department does their deal and returns it to HUD, Fannie Mae, Mortgage Insurance company, or keeps it in their portfolio...

Good luck with this one.....keep pushing them...maybe you can work something out.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Fri Oct 14, 2011
Bruce Lynn, Real Estate Pro in Coppell, TX
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