Buying parents home with tax liens (California)

6 Replies

Parents home is paid off, however, heavy tax liens against the property - now threatening foreclosure. Unable to gain loan or HELOC to pay off tax liens and selling is not an option for them. I really want to help them as a cosigner or them gifting me the house, lots of equity and good investment long term. Don't have enough cash available to pay off loan.

What are my options? 

Originally posted by @Jordan Jones :

Parents home is paid off, however, heavy tax liens against the property - now threatening foreclosure. Unable to gain loan or HELOC to pay off tax liens and selling is not an option for them. I really want to help them as a cosigner or them gifting me the house, lots of equity and good investment long term. Don't have enough cash available to pay off loan.

What are my options? 

Two possible solutions. In either case, provided there's a bunch of equity in the property, no big fat giant down payment would be needed. One of these two would involve PMI, the other would not.

1) Is it possible/plausible that you have sufficient income to support the mortgage on that property, in addition to whatever else you have going on (your own primary residence mortgage or rent, etc)?

2) Does an immediate family member of your parents, who is otherwise a good candidate for a mortgage, live there now, and/or would they be willing to move in for a year (again, don't worry about the down payment for now)? The last one I did like this, daughter of current/previous owner and her own 3 kids were already living there, we dubbed it the FBOM (yup, we pronounced it how you think) - Family Bailout Opportunity Mortgage - and I thought it was going to be a thing. Not a lot of demand for this, so it wasn't a thing, but the guidelines still allow for it. Their cash to close was like $800 or something, with no mortgage insurance, A-paper loan/rate/etc. Local real estate lawyers, so far, haven't really grokked the full implications of what I just described...

What about refinancing the property? Pay off he tax liens and roll that back into the new refi mortgage.

Set up property taxes and insurance in escrow so this never happens again.

@Jordan Jones

“Selling is not an option for them”. If they have significant equity they might be better of selling than losing home to foreclosure. They might be able to work out a lease agreement at a low rental with the buyer, if they sold at a below market price

Are there tax lien lenders in CA?   If so some of them might lend on it.   You have to pay them though or they foreclose on the house.

You could ask for payment plan from the tax authority to stop foreclosure.

@Jordan Jones If your parents' home is paid off (i.e. no mortgage), then there isn't going to be a foreclosure because there's no bank/lender to foreclose on them. What I think you might be referring to is a county tax sale for past due property taxes. However, in California, in order for that to happen your parents would have to have not paid their property taxes for five or more years. Is that how long they have not paid their property taxes? And if so, how would they pay a mortgage or HELOC or other type of loan if they were to get one?