Who pays unpaid property taxes?

Asked by looking for help, San Diego, CA Fri Jun 6, 2008

A house I am interested in has 2 years of unpaid taxes. The seller also appears to be underwater by about 20% loan to value. I am not sure there is even enough to pay a commission. Who pays the taxes? Is there anything that can be done or should I move on to something less distressed?

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The Hagley G…, Agent, Pleasanton, CA
Fri Jun 6, 2008
This sounds like a short sale situation. If that is the case, make sure you have a Realtor representing you....their commission will be paid by the lender. Also, the property taxes will come out of the lender's proceeds if they agree to the short sale. Good luck!
1 vote
Jim Johnson, , 78233
Fri Jun 6, 2008
If the proceeds will not cover the delinquent taxes, they will need to be paid out of pocket prior to closing. The title company will not issue a title policy with a cloud of that nature on the property.
1 vote
Sylvia Barry,…, Agent, Marin, CA
Sat Jun 21, 2008
I don't know why Cindi received 2 TDs for her answer. This does sound like short sale to me.

Somebody (preferably a Realtor who deals with short sales) will have to negotiate with the lenders on the price they will approve which should cover various items such as property tax, HOA dues (if any), etc and commission (part of your question).

If the purchase price does not cover those and the lender does not agree and the seller does not have enough money to pay, then as others said, the title company will not provide title insurance nor will it handle transferring title on the house (BTW, title company does not issue new title - they insure the title and facility the process of paying off all loans/dues/fees/etc, transfer proceeds and go to the county to record the title transfer).

0 votes
Jim Johnson, , 78233
Fri Jun 6, 2008
I should have addressed this the first time around. I'm not sure what you mean by "underwater by about 20% loan to value"--it's not a turn of phrase we use. I'll assume that you mean 80% LTV.

As a rule of thumb, the seller's settlement costs should run no more than 11% - 12% of the sales price. If the tax debt is less than 8% of the sales price, the tax debt should not be a problem for you if the seller has 20% equity in the property.
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