Owner financing and Buyer owes 5k unpaid property taxes

5 Replies

I owner financed 5 acres of land to a gentleman with an auto salvage business in 2013. I find out that along with the buyer I am named in a lawsuit for unpaid property taxes.  He owes about 5k in unpaid property taxes.  He claims to have made several payments of $500 and $1k for past several years.  However records show no payments for 2015-2017.  The buyer has no clue that he is in a lawsuit or that the case will be going to trial tomorrow.  Correct me if i am wrong but there is potential for the property to auctioned by the county? At this point i feel i should pay taxes to prevent that and should i also forclose on buyer?

Originally posted by @Amy Nguyen :

I owner financed 5 acres of land to a gentleman with an auto salvage business in 2013. I find out that along with the buyer I am named in a lawsuit for unpaid property taxes.  He owes about 5k in unpaid property taxes.  He claims to have made several payments of $500 and $1k for past several years.  However records show no payments for 2015-2017.  The buyer has no clue that he is in a lawsuit or that the case will be going to trial tomorrow.  Correct me if i am wrong but there is potential for the property to auctioned by the county? At this point i feel i should pay taxes to prevent that and should i also forclose on buyer?

 If you are on title, you are on the hook. I'd pay the taxes and then sort things out. If you know that the case is going to trial tomorrow, you should really be talking to an attorney not us.

Agree with @Mike M. . You don't have much time to discuss the issue here. I don't even know if you have time to contact  an attorney now !!! it is 9pm on the east coast and you going on trial tomorrow ...

Why did you wait until the last minute to find a resolution to this issue? Should be a lesson learned.

Hello, 

I live out of state and just checked the mail to see the letter today. I will try to find an attorney tomorrow and see what we can do.

Amy,  these are the types of situations that I look for when I go to auction.  You can go pay the taxes, or let it go to sale and then redeem it but it will cost you a 25% premium.   (Go pay ahead of time).  The 25% premium is what the property sales at the auction, so if it brings 10K you will have to give 12500 to redeem it.  

Get the taxes paid, you can usually wire the money and it may stop some of the cost.  You then have to have a hard discussion with the owner.  I make sure I escrow taxes and insurance on properties I owner finance.  I doubt he will have the money to pay you so the 5000 will probably have to be put on his note.  

I would do recommend an amended refinance, which includes this balance and any other cost you may incur, and escrow for his taxes and since rates are rising I would recommend an increase in interest rate for your troubles.  If he is unwilling, then you can start foreclosure proceedings for breach of contract on his original note.  

Get the taxes paid, showing you as lien holder paid them.  then discuss with a lawyer on the balance of the matter.  

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