Philadelphia back taxes

2 Replies

Hey BP community,

I am dealing with a new potential deal where the ARV is definitely there along with the rehab costs. The seller is insistent that he does not want to pay the owed back taxes of $37,500. He also states that there's a way to have the purchase go through even with a lender and have the taxes paid on the back end.

Are there any Philly investors who have dealt with this before? If so, how would it be done?

Either way.. the city is getting their money.  At closing, any liens/back taxes/etc owed are paid to the people who are owed.  So let's say you're buying the property for $100K, but the current owner owes back taxes ($37,500) and for example, money to the Water Dept (owed $1500) and PGW (owed $1500).  Then at closing your $100K payment is made, but the title company pays out appropriately the taxes to City of Phila along with money owed to Water and PGW.  Whatever is leftover goes to the seller.  I've heard of closings where tens of thousands went back to the city, water, etc dept and the seller only walks away with $5K.  There's no way to skirt around it and also you don't want to either because if you do and you're the "new" property owner.. they'll come after you (e.g. collections agent). 

@Derrick Alexis is there enough meat on the bone for the buyer to pay the taxes?  If the property is currently valued at 100k (just using an easy number) add the taxes and your fee.  Does it still constitute a good deal for an investor?  If not, then move on to the next one.