If a house goes to short sale to the bank and they are delinquent on their taxes does the new buyer have to

Asked by Jackie Bone, Palm Deserrt, CA Thu Jul 24, 2008

pay all of the taxes that are delinquent.

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Michael Cirr…, , La Verne, CA
Sat Jul 26, 2008
Jacqueline, The correct answer is that the Buyer of a home at a Trustees sale does have to pay the deliquent property taxes in addition to the final bid price. Thus , if you were to bid on a foreclosure at the court house, etc it is important to know the deliquent property tax amount. I have purchased over 30 trustee sales and have had to pay the property taxes after the fact. If the home is an REO ( Bank Owned) , the bank will have to pay this trough escrow at the time of sale. Also, IRS liens can unwind the foreclosure sale a 120 days after you close on the deal. So, if the property has IRS liens, forget it. If it is a Short Sale, the Seller and /or Bank will need to pay these trhough escrow for the benefit of the new Buyer. Since you will be in escrow, clear title will be a condition of the Title Insurer and the Buyers lender. Thus , the property taxes will need to be paid in escrow. Good Luck
2 votes
Shel-lee Dav…, Agent, Rolling Hills Estates, CA
Thu Jul 24, 2008

I specialize in short sale transactions and will share my experience with you. The short answer is no, the new buyer will not have to pay the delinquent taxes unless they agree to do so. The way this is handled is:

When a listing agent, who knows how to handle short sales, submits a short sale package to the bank, one of the items that must be included is a HUD-1 or Net Sheet. This is a calculation of how much money the bank will get on the deal. I work with my Escrow officer to make sure that all liens (including property taxes) are fully disclosured to the lender and handled through the transaction. This must happen for the new buyer to be able to get title insurance on the transaction. And the buyer's new lender will not fund their purchase loan without title insurance. This is your guarantee that you are buying the property free and clear of liens and encumberances other than those disclosed in the title policy.

Make sure you review the preliminary title report, make sure that at closing all the liens are being paid through the escrow, and make sure that you are getting title insurance on the transaction from a reputable, and stable, title company. The best way to make sure all this happens is to work with a great team of real estate professionals including a Realtor, Title Officer, Escrow Officer, Lender, etc.

Good luck in building Your Dream Team and Dare to Dream.

Shel-lee Davis
Real Estate Consultant
RE/MAX Palos Verdes Realty
2 votes
Monique & Joe…, Agent, Beverly Hills, CA
Thu Jul 24, 2008
Hello Jaqueline,
No. From my experience the property will need to be free and clear of all encumbrances prior to being transfered to the new owner.

Web Reference:  http://www.reavisgroup.com
1 vote
Walter 'Skip'…, Agent, Brea, CA
Thu Jul 24, 2008
Hi Jacqueline,
All tax liens on the property will need to be paid before title will transfer to the new buyer. In other words the new buyer will not pay them although the amounts may be factored into the asking price. I hope that helps, Walter
Web Reference:  http://ocnorth.com
1 vote
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