I found a property that the owner hasn't paid the taxes on. The property is going to aucution to settle a judgement for back taxes. My questions are, if the current owner owes money on the place to a bank, and the county has it up for sale, is the buyer responsible for paying the bank? Also, is there a way to find out if there is a note/money owed on the place if so?
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Question 1 - The government always has first lein. The money received from the auction will first pay any back taxes, the remainder of the funds will go to the second lien holder which would be the bank or mortgage company. If there is any funds left over after paying the bank, the remaining funds would go to the next lein holder in line. So, no the buyer doesn't have to pay the bank.
In reality, if there is a bank or mortgage involved they will go to the auction and be the high bidder to protect their interests.
Any title agency can run a title report to see if there are any leins. You could also go to the court house yourself and find out if there are any leins filed on the property. -
Usually the bank will step in and pay the back taxes owed, and add that back to the loan if it is current, or pay them and start foreclosure. There are those few times where the bank drops the ball and does nothing. It goes to the highest bidder if it makes it to sale and usually the bank will be there for that as well. They will bid up to the balance of the loan plus taxes owed.Comment
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Generally if any property is worth its salt, tax will be paid off before it goes to auction.Comment
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Ok, so it sounds like if I bid on this thing at the auction, I'm clear of having to pay any lein. I'll do some more research on it. Last thing I want to do is make a bid and then have to turn around and need to pay someone else.Comment
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Aggieb - This is an auction to settle back taxes owed to Harris county and the school district.Comment
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You should be free and clear of that. However if this is the first time the place has been put up for auction the current owners do have and opportunity once its sold to buy it back with penalty and interest.Comment
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Another thing to note is that even if you happen to be the highest bidder, it doesn't mean the school board will except your offer. It really depends on the amount of back taxes, property value, and your bid. However, if your offer is approved, there shouldn't be any liens on the property.Originally posted by Dejashoot View PostComment
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It just so happens that I know what the back taxes are on the property for each entity (per HCTA).Comment
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Isn't it two years the owners have to buy it back Randy?Originally posted by aggiebowhunter View PostComment
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I hope I'm not following this correctly. If I buy it (get a loand and everythign) and do all kinds of work to it, the person who didn't pay the taxes can buy it out from under me down the road?Comment
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That is generally the opening bid.Originally posted by Dejashoot View Post
Two years sounds right Ill have to pull out the tax code to make sure, if theyve bought it back previously second time is sells its gone forever.Originally posted by Bill M View Post
Originally posted by Dejashoot View Post
Yep and I believe they have to pay you for the improvements youve made to the property but I have heard they can be hard to prove you did.
From my experience people have about 8 years worth of opportunity to take care of these matters before they go to auction. They are given many many opportunities to get these tax matters straight. Seems that people disreguard all the letters and calls until its to late and it goes to auction.
In most cases once a place has sold at auction the original owners rarely purchase the property back. If the property has enough value to have a lien put against it for a loan to pay the taxes it generally takes place at some point during those 8 years. If its past that point they rarely but do occasionally get bought back.Comment
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Yea, the taxes haven't been paid in 10 years on this place. I'm checking with the county to see if there is a lein.
I may take my chances and go for it.
I appreciate the info. Huge help!Comment
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If I remember right the interest portion they have to pay back to you is in the 20% range.
Need any more help pm me.Comment
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