I bought a house in 2002 for rehab purposes. I had a hard money money loan with a balloon payment. Needless to say, I got into trouble with the house and a family member purchased it from me. We used the equity to finish the rehab and make six months of payments. The house has still not been sold. The money is gone. I contacted a guy who has offered to do a subject to, no equity on our part. He stated that we have to pay all of the taxes up to date. My family member has not been late with a payment yet. She worked very hard on rebuilding her credit and this guy says he will make the payment for this month, but has not done so yet. We have already signed the paper work, but I have not paid the taxes yet. They are extremely high ($6,000). However, all I have is half of that. If I pay this, I can’t make the payment if he doesn’t pay. He has been the only investor out of many inquiries to see the home as a good deal. Because of the high payment no one has wanted to touch the deal with a ten foot pole. The payment is late after today, but I don’t think it will hit the credit report until it’s later than thirty days. I keep saying to myself that it behooves him to make the payment for his investment purposes, but he could easily let the payment get behind with no recourse if I’m correct. I just don’t know what to do, and I apologize if I’m rambling.

Howdy Deepvoice:

You can contact the taxing authority and work out a payment plan over 6 to 12 months. Get the investor to go along with this and you will be able to work together and get this monkey off your back. You and your family member should be able to pay 50% each of the monthly tax payments. Use the 3 grand as a down payment on the taxes as soon as the investor makes his 1st payment. You may also only use 2 grand as down payment and keep a grand in case next month payment gets behind or you need help paying the tax payment. Try to keep some of the $3000 in reserve if possible.

Thanks for responding. We haven’t yet been billed for this year’s taxes. We are not behind, but he wants us to pay up until today. Will they still set up a plan for me and do I base the payment off of last year, because I called both the county and the school district, and neither know what to charge yet for this year.

I would base it on last year and agree to settle up later if there is a big difference. Title companies do this too on all their closings. I thought you were behind on the taxes. I am assuming that the mortgage company does not escrow the tax money either. You can certainly start paying on the taxes before they are due and I am sure the tax office will help you work it out . Here in Austin we have one agency collect for all the different authorities, City, county, school, college. Taxes are high here too because we have no state income tax.

Thank you. The mortgage company does not escrow the taxes. I just spoke with the investor. He’s with a trust, and he says that the taxes must be paid in full up until today, and that they cannot accept any payment plan.

I’m sorry, but I just keep coming up with questions. Is it common practice for the investor to pay the mortgage company directly, or do they pay the former owner since the loan is still in their name.

It can sometimes be a cathch 22. The investor wants to make sure the mortgage company get paid so he does not lose if the owner decides to keep the money and let the house get forelosed. The owner wants to make sure the buyer pays and wants the payment made to them. If the buyer is a crook then he of course wants to pay directly too. I have been involved paying as an investor both direct and to the owner. When it goes bad you want to know asap. If you let him pay direct you can still keep tabs on the loan usually on line or touch tone phone system. Usually the one who cares the less wins this negotiation. Although you and your family member have the most to lose you still want out of the deal.

He should be able to accept the tax payment plan but his showing concern looks as if he cares about the deal. Can you get them paid some how, credit card, loan from another family member ?

Hope it works some how for you.

I do believe that he wants to pay directly. You’ve brought up some good points and I thank you for your time.