Taxes Paid on Property by Mistake? Can we file a tax lien?

Question

My husband foreclosed on a property in Texas and entered a legal battle to remove the borrowers.  The borrowers sued my husband for wrongful foreclosure (but that's another story).

During the time my husband *thought* he owned the property, he paid the taxes (4 years).

The judge recently set-aside the foreclosure, so my husband was never really the owner.  Can he get the taxes he paid returned? Or should he file a lien?

Tom Gimer · Answer

You likely need to sue the owner for unjust enrichment. When you get a judgment against the unjustly enriched owner, you'll have your lien.

Greg H. · Answer

@Jean Norton

Assuming the property was not his homestead which makes it much more complicated, why did your attorney not recommend you sue over the non payment of the valid not and therefore get a judgement that could be foreclosed on ?

I'm not sure your tax sale strategy would work as it would wipe out all liens and overages are supposed to be forwarded to the previous owner via a simple court process.  However,  the forwarding of the taxes should enable to obtain a judgment for the amount of the taxes

Jean Norton · Answer

One of the reasons we are changing attorneys @Greg H.  I even asked about getting the unsecured judgement, but I guess that would be too simple for our attorney.

It is not homesteaded.

Jean Norton · Answer

Good point @Tom Gimer.  Thanks for helping me see the obvious.

Tom Gimer · Answer

Nightmare.

If this shouldn't be a foreclosure then so be it. Add a claim for the property itself/its value to the separate suit along with the tax claim. There is more than one way to get an interest... that's how I would be thinking anyway.

Is your "friend" really going to let their now free-and-clear property go to tax sale? Not likely.

Jean Norton · Answer

This is an incredible and convoluted case that involves a conflict in the law.

First: Deeds must be signed (This includes Deed of Trust)Second: Doctrine of Incorporation by Reference (Which means that one signed document that references another unsigned document makes both documents enforceable.)

I may write a blog post: How to Steal a House, and the Money too.

My husband loaned money on a property in another county and hired an attorney to prepare the documents.  The closing happened remotely.  The borrower signed the promissory note and told my husband he would save him the trip and file the deed of trust for him in the local county.  My husband trusted he would do so.

Months later, the Deed of Trust was still not filed, nor signed.

My husband and the borrower had a falling apart due to some other legal issues, of which the issue of the Deed of Trust still wasn't signed was included.  The judge ordered that there was a "meeting of the minds" and ordered the borrower to sign the Deed of Trust.

The balloon payment was never paid, nor was the Deed of Trust signed.  The attorney that drew up the paperwork guided us in the foreclosure process, suggesting that the judge's order of a signed Deed of Trust was sufficient to perform a non-judicial foreclosure, of which we did in January 2014.

They borrowers sued us for "wrongful foreclosure", as we foreclosed without a signed Deed of Trust.

There was a clerical issue in that when the judge ordered the deed of trust to be signed and executed his order said "attached".  However the deed of trust wasn't attached, therefore the borrowers claimed they didn't know what they needed to sign.

A new judge came into play, and ordered the deed of trust to be attached some 18 months ago.  At that time there was a motion for summary judgement to set aside the foreclosure sale.  It took the judge 18 months to revisit that motion (and it got his attention as we filed a writ of mandamus to force him to rule), and he ruled to set aside the sale.

Already $30k in legal fees, we have to revisit our next steps:

1. Appeal to a higher court to decide the conflict in the law.

2. Continue the legal battle, motion to compel (face contempt of court/jail) the borrower to sign and foreclose once again.

3. Let the property go to tax sale, where we or others could bid on the property and collect the overages as the lender.

This is why I wanted the taxes that my husband already paid to be repaid as a tax lien.  Even if he got a judgement for "unjust enrichment", that judgement would not survive a tax sale.

And yes, we still face charges of conspiracy and fraud in addition to the complication of the foreclosure.

Tom Gimer · Answer

@Jay Hinrichs @Wayne Brooks

I'm sure things aren't cordial here. So very likely that when lender claims it "advanced" the taxes pursuant to some right reserved in the security instrument and adds to the balance... borrower will deny that is how things occurred, and they may be right.

Idea is to protect against that possibility by getting a separate judgment lien for the taxes paid. (Slam dunk case btw.)

Greg H. · Answer

Unjust enrichment is the proper term. I am very interested in the back story.  If less than 10k the JP court is the way to go.

It's not that rare that someone attempts to gain control of a property in Texas by forwarding the unpaid taxes

I actually had a foreclosure under contract this year where a knucklehead paid the taxes and actually filed a memorandum that he bought it from the seller. However, he listed the seller as the Real estate company on the sign in the front yard. The deal wasn't good enough to go through the process to clear the title but the guy will get back the money he paid for the property taxes

Jay Hinrichs · Answer

@Wayne Brooks  well if for some reason they lost the ability to foreclose like maybe they were paid off.

then as @Tom Gimer  they can shoot for unjust enrichment.. but I would not think attornies fee's would be paid.. so one would have to weight cost of litigation / against what you may win.. and do the people have any money or do they still own the home. ?

Taxes Paid on Property by Mistake? Can we file a tax lien?

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