Home foreclosure tax question!?

Question:

I am foreclosing on a home in California. My question is, I owe back taxes of $5k that I have not had the money to pay. If the home goes into foreclosure and then is foreclosed on, am I liable for the property taxes? Obviously if I was able to pay the taxes and avoid foreclosure I would have. Also, a short sale or a title deed are out of the question. Thanks for all your help.

Answer:
You won't be liable for the back taxes once the house goes all the way through foreclosure. Once the home is sold at sheriff sale, any defaulted property taxes are the first thing to be paid off, even before the first mortgage.

So, unless the house sells for less than $5,000 at the foreclosure auction, the taxes will be paid off through the proceeds of the sale. Any amount beyond the $5,000 will be used to pay any mortgages or liens on the property, and any amount after that will go to you as your profit from the forced sale.

That's too bad the short sale and giving a deed in lieu of foreclosure won't work in your situation, for whatever reasons. Just focus on getting your credit back in order with other bills, if possible. Or an even better idea may be to take the opportunity to get a fresh start and not rely on credit anymore and become a little more invisible to potential creditors.

Good luck.

ForeclosureFish
http://www.foreclosurefish.com/...

You had incurred the tax and therefore it is your responsibility.

Your question is contradictory. Are you a homeowner who is losing his home to forclosure or are you a lender who is owed the home loan (seller financing). I presume you owe about $5k in local property tax. You will not be personally liable. It is the property that is liable. The difference is subtle but important. Local property taxes take priority over everything. If they are not paid, after five years the county tax collector can sell the property to the highest bidder and wipe out any mortgage that exists. Most likely, the lender will purchase the property at the trustee's sale and then list it with a local broker. When it sells again, any deliquent property tax will be paid.

Taxes get paid first! Then if there's anything left the first lender gets paid which is why it's not such a good thing to be the second lender in any transaction. Good luck with future housing plans and hopefully this can just be the best lesson you ever had to just get through so that it never ever happens to you again! I think going through it once should be more than enough for anyone. Sooo sorry for the trouble.

Home foreclosure tax question!?

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