Delinquent Tax Sale with Deceased Owners?

Question

Hi everyone! If a house is being foreclosed on for delinquent property taxes, but the owners are deceased, what is the process? I understand probate, but if the auction is next month, does that go above probate proceedings? Any knowledge on this would be helpful! Thank you!

Laura Kayes · Answer

Thank you all!!! :)

Jerel Ehlert · Answer

Before a property is sold for back taxes, there is a suit.  Usually there will be an "ad litem" report.  That is a court appointed lawyer to do due diligence for the taxing authorities.  They will typically visit the property, talk to neighbors, do a genealogy search - decent skip-tracing.  That would be my first stop.  You can get the case number from the sheriff's posting of foreclosure in the real property records.

Next, contact proposed heirs.  Get a contract, open title, find out what underwriting will require to close.  If you can close before the auction - mazel tov!  More likely, you will need to stop the auction for the heirs because the heirs can't or they would have already.  Any significant money paid by you should be secured.  I usually see this as your option fee to get an option on the property from all proposed heirs.  Make it decently long.  You are not limited in time for your option period.  Record the option in the real property records.

Now that the auction is stopped, you can work on title issues.  Title companies can do a lot of curative work, but if you have to go to probate and the property is worth over $50K, expect between 1 to 2 years on average.  Shorter if everyone agrees and facts are clean.  Longer if heirs start fighting and facts are muddy.

The option fee can also be used to retain a lawyer.

Charley C. · Answer

Again, not a lawyer, I don't study how these laws and rules are actually ratified and see them play out like a good lawyer

but here is  how I make my decisions: on any foreclosure sale, the property will be auctioned off to the highest bidder. In this case, it sounds like the highest bidder is going to be a lot more than the property taxes and legal fees owed

lets say the fees and taxes are $25,000

the sale is 125,000

the delinquent former owner should get $100,000

do you now see the motive for larceny  $ ? or may be hopefully, the estate just needs some cash to pay for a funeral, bidders on the property.. we just don't know

When ever a deal is really too good to be true, there is a reason. Doesn't always mean its a deal killing bad reason.  I would never run, just take more steps until I got my hands around it

the last party I would want  advice from is from the executor. If you are bidding on a foreclosure sale , never communicate with the person being foreclosed on for a multiple of reasons.

case and point, if a property is being foreclosed on and there is a les pending (means pending a law suit) on that same property, the smart money is not bidding one dollar and know AND if they did and also communicated with the debtor, any party disputing the foreclosure would say "conspiracy" seen this happen

If there is a dispute on the probate, you will be paying lawyers  in that case. Assume there will be a dispute. Proceed in such a way that if there is a dispute aka the real heirs  show up, proceed in a fair manner, they can redeem and refund you to get the property back. Stay focused on being fair on who might show up. talk about that with your title co and legal team to hedge your risk

Solomon Rodgers · Answer

Thanks, Mark!  That's good info to know!  @Mark Pedroza

Mark Pedroza · Answer

The Executor has to be nominated (assigned) within the will of the decedent.

The next of kin (spouse) is appointed by the court if there is no will to be Administrator of the decedent's estate @Solomon Rodgers

Michael Mullins · Answer

Skip trace   Skip Genie   the owner and find a family member that wants to make $1000 to sign off on the sale. Contact your local title company and they’ll handle all the paperwork.

Jerel Ehlert · Answer

@Charley C. You have quite a bit to unpack each time you post, but all relevant.

Generally, there is NO  question that taxes are due and the owner must pay.  Generally, the only thing they care about is getting the tax money, from any source.  The only question is: did they have proper notice and hearing.  And that's a US and TX constitutional question because this is a taking.  The only reason to undo a sale is if it was obvious that a person with interest in the property was intentionally left out of the proceedings, and then only *maybe*.  One of the functions of tax sales is to get properties back into circulation.

You might also be surprised that people with an interest in the property just don't bother to participate.  Even when they could.  So if an investor came along and gave them something for the trouble and drove the process at their own costs...

Like you, my most profitable transactions were out of probate.

Charley C. · Answer

first want to tell @Laura Kayes the most profitable deals I ever done was were I was jumping on the deal at the tail end of a probate journey

@Jerel Ehlert like that idea of the option fee being your fee, excellent win-win for all. Thank you for chiming in give us an education based facts.

Looks that there is going to be some mud in the water most likely or the property would of already been sold conventionally.

Assuming the court appointed lawyer does the right due diligence and does a great job; I am sure you seen great jobs by attorneys still get overturned. Do tax suits ever later get over turned? Just flat out over turned voiding the validity of the foreclosure? Make it have to be redone.  That would so be my luck.

I am following this discussion because I seen so many probates make real opportunities for the non-litigants. The money can be made with out a lot of risk ONLY if all parties are satisfied at the end of the day.

I guess the key is not to become entangled as a litigant in the probate court, just be a buyer benefiting all parties. I wouldn't mind getting a little bogged down doing curative work with cost fixed.  That's if the property is in my possession earning income AND most of all, If a party sues me, I have to be in a position where I could reasonably expect a summary judgment or a quash will get rid of it

Laura Kayes · Answer

@Charley C. I'm not sure I've heard of surplus... could you explain? Thanks for your responses as well. Title insurance is a great idea.

Charley C. · Answer

I did think of something else. What If that "executor" might be in a hurry to take the money and run. Get all that money from the surplus at the tax sale and boogie. Only because that's not the last will he is acting on. Another will shows him not as the executor at all.   Where do your risk lie in that event? I would speak with a title company and see if they can issue title insurance for the foreclosure sale, then i would ask them for a good real estate attorney to make sure you don't get entangled if indeed something aint right with that probate.. Its already showing signs that something unusual is happening so do be careful

Delinquent Tax Sale with Deceased Owners?

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