Foreclosures

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Foreclosure and back taxes

Posted Jun 17 2022, 05:53

If a property goes into bank foreclosure and gets auctioned, but also has unpaid property taxes,  are those unpaid taxes carried over to the high bidder, or does the bank pay them off?  In ohio. 

Cincinnati, Ohio

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Nancy Truong
  • Attorney
  • Houston
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Nancy Truong
  • Attorney
  • Houston
Replied Jun 17 2022, 16:57

Generally, government liens such as tax liens have higher priority than mortgage (bank) liens. If the bank doesn't pay it than the third party buyer ends up paying for it. It doesn't get wiped out since mortgage liens are junior. Some bank will pay off the liens because of certain requirements. For instance, FHA loans are backed by government so banks will need to clear title in order to get their money back if it goes into REO.

- Nancy Truong, Texas Attorney 

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Wayne Brooks
  • Real Estate Professional
  • West Palm Beach, FL
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Wayne Brooks
  • Real Estate Professional
  • West Palm Beach, FL
Replied Jun 18 2022, 05:07

@Phil Hucke No, taxes are not paid from any surplus funds at a foreclosure auction.

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Dwayne Poster
  • Investor
  • Van Isle
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Dwayne Poster
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  • Van Isle
Replied Jun 18 2022, 15:55

It will depend on what the bank seeks in its resolution, and what the judge determines. In my area it is common for the lender (bank) to seek clear title, and providing vacant possession, for the benefit of a purchaser, at the expense of the seller. Easy to take care of when you have a judge scheduled to preside. 

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Mike Hern#4 Market Trends & Data Contributor
  • Investor
  • Scottsdale Austin Tuktoyaktuk
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Mike Hern#4 Market Trends & Data Contributor
  • Investor
  • Scottsdale Austin Tuktoyaktuk
Replied Jun 18 2022, 16:06
Quote from @Phil Hucke:

If a property goes into bank foreclosure and gets auctioned, but also has unpaid property taxes,  are those unpaid taxes carried over to the high bidder, or does the bank pay them off?  In ohio. 


 Foreclosures are State specific. Out west we have Deeds of Trust for the most part and Mortgages are more frequent in the east. Some states have redemption rights and others don't.

Foreclosures can be really tricky. In some states it is actually against the law to call, mail to or otherwise solicit someone in pre-foreclosure unless you are an attorney, real estate agent or mortgage lender. 

So, be CAREFUL out there when you target foreclosures. Know your local laws. Pay an attorney to get a list of things that will get you into trouble and find out what keeps you Out of trouble. Your local Sheriff & DA & Judge will appreciate it.