I cant seem to find a direct answer to this question? does it fllow the previous property owner? does the bank just loose out? is the person who bought the tax deed liable for it?
thanks
all mortgages are completely wiped out (except for N. Mexico)
so any of the banks or lending institutions, whether it be 1st, 2nd, etc…lose their investment!
here is something that not many people are aware of…
let’s say I live in Florida, and I have a mortgage that is way more than what prop. is worth…and I don’t have a lot of money, and I can’t pay the taxes, so I’m pretty much in a s&%&@y position…
If I let the prop go to the deed sale after 2 years (FL is hybrid state), and the bank doesnt redeem, and the prop is sold…I’m screwed, right?..nope
let’s say I owed $8,000 in back taxes to the county, and the prop. is sold at auction for $55,000…
the county (by law) can only keep the $8,000…so where does the other $47K go?
it goes to the homeowner who lost the prop… (however it is their position to apply for this money, and most people don’t even realize it… whateva)
so the person who had money, was in debt, couldnt pay the taxes, lost their prop…is now sent a check for $47,000… (doesn’t work like this in all states) - some states the remainder of the money that doesn’t go to the county is divided up between the lien holders from most important and down…
The investor who bought the tax liens or tax deeds would be liable for the said property. Taxes owed to the government must be settled.
liable for what exactly?
Confused here…
Also, if the mortgage is wiped out in a tax deed sale then why wouldnt a homeowner do the following-
Not pay taxes, let said property go to foreclosure, then have a friend purchase the property at auction wiping out the debt and re-selling back to original owner?
Now I would think this might be fraud, but in this economy I would expect people would gamble and try and do this?
Of course this is assuming taxes are not impounded/paid out of escrow. And, the homeowner being upside down.
Tax lien adviser is right. In most cases the mortgage is wiped out. This can vary with state law, but it is quite common and certainly the law in Maryland. This is exactly why mortgage companies normally escrow and pay the taxes themselves.
I will talk about Maryland law here however it is typical of how tax sales are done. The bank or any other lien holder is notified of the tax sale. They can, and usually do, pay the taxes to protect their interest. If they do not, their security in the property is lost.
However they owner is still liable to the mortgage company. A mortgage has two parts; the mortgage (or deed of trust) is the security in the property. When you take out a Mortgage you also sign a promissory note. That note makes you personally liable for the amount due. The security is what get wiped out not the personal liability.
Tax Lien Investor mentioned you could claim the amount of the bid, above the taxes due. ( usually called Surplus) The mortgage holder would have first claim on this.
wondering the same thing… glad I got the answer from this thread. Thanks
TaxLienAdvisor and Ncarey
This is an example of an excellent thread. Question asked, question answered, done. Well done!
All the best,
~Slim~
In a tax deed/lien sale the mortgage follows the previous property owner and the new owner receives the property free and clear. Any money paid by buyer that is above and beyond what is due to the county to pay for the taxes is paid to the various lien holders, which generally includes the mortgage company in the first position. Once the sale of the property has occurred the bank can seek to obtain any additional money that is due from the original property owner.
After a tax deed sale is complete and the taxes are paid, if there is any monies remaining, how does the home owner claim the money ?
all mortgages are completely wiped out (except for N. Mexico)
NOT SO, they are wiped clean from the title and BECOME unsecured debt.
so any of the banks or lending institutions, whether it be 1st, 2nd, etc…lose their investment!
NOT SO, se above.
here is something that not many people are aware of…
let’s say I live in Florida, and I have a mortgage that is way more than what prop. is worth…and I don’t have a lot of money, and I can’t pay the taxes, so I’m pretty much in a s&%&@y position…
If I let the prop go to the deed sale after 2 years (FL is hybrid state), and the bank doesnt redeem, and the prop is sold…I’m screwed, right?..nope
let’s say I owed $8,000 in back taxes to the county, and the prop. is sold at auction for $55,000…
the county (by law) can only keep the $8,000…so where does the other $47K go?
it goes to the homeowner who lost the prop… (however it is their position to apply for this money, and most people don’t even realize it… whateva)
so the person who had money, was in debt, couldnt pay the taxes, lost their prop…is now sent a check for $47,000… (doesn’t work like this in all states) - some states the remainder of the money that doesn’t go to the county is divided up between the lien holders from most important and down…
In FL after the tax certificate matures you still must go to foreclosure and any excess from the foreclosure sale will go back to the chain of title…NOT to the owner.
[b]PLEASE be accurate in you posting. There are those who are new and believe your post to be truthful and accurate.
It does not speak well for you to post inaccurately and does not bode well for the newcomer to take it as fact.[/b]
There is not enough information on the posting. It is Tax Deed Sales that wipe out the mortgage(s) or when the property become a deed to the new owner. Tax Liens do not wipe out the mortgage(s). Also, Tax Sales do not wipe out Assessment or IRS Liens (government liens), if they are attached to the property.
Most Tax Deed Sales I have been to get sold close to fair market value. You have to check which counties does not have a lot of bidders to get a good price. It is a lot of research work before the auction with most of the properties getting redeemed before the auction.
My suggestion is if you ever over paid, you should consider extending the living space for a larger home. That may help, provided the area can support the estimated selling price in a good area that sells.
can the former homeowner claim the surplus funds from a tax sale if the mortgager or other lien holders owed do not place a claim on it; or will the former home owner just be denied all together?
Tax Lien investing is like any other real estate investing…it IS NOT without risk.
The courts simply DO NOT like to take property for the mistake of not paying the taxes.
I sugges you google Jones vs Flowers and read the SCOTUS case. Case took SEVEN yeas and FINALLY went back to the owner.
DUE PROCESS must be DONE.
In all tax lien or tax deed cases if you wish to clear title you must go through a Quiet Title Action court case.
You DO NOT get the property free and clear as a result of the tax lien sale.
The most common defense is …"But, Yoour Honor I was NOT PROPERLY SERVED: and it will revail in most cases.
You are best served by going to your local courthouse law library and asking the librarian to assist you. Get alll the data on how tax liens or tax deeds are done in your state. Read it at least three times to get past the legalese.
OR, you can do the research on line…go to your state statutes, and look for real estate taxes, etc and you will find the statues on how tax liens or tax deed are done. downloand and READ.
Start the process easy and simply…do not jump in…the water can be very deep.
iINVESTIGATE…BEFORE YOU INVESST !!!
The mortgage is extinguished but the note still exists, detached/unsecured from the property. The debt essentially becomes the same as credit card debt or a personal loan. They can garnish wages and harass the borrower until they file bankruptcy.
Are you referring to a tax lien sale or tax deed sale.
From My experience in Texas, Mortgages would be wiped from the property if their is proof that the mortgage company was indeed served and should have been aware of the tax sale taking place
There is no surplus concerning the mortgage at a tax lien sale.
Any overbid for the lien would be subject to your local state statutes.
You are not bidding on the mortgage…only…on the taxes.