who is response for the tax delinqucy after trustee sale


#1

My friend just bought a property in trustee sale, this property has about $15K property tax delinqucy, does it wipe out or my friend has to pay it?
I am not sure if any one know the answer.


#2

Property taxes always run with the property. Your friend will need to pay all current and past due property taxes. The recording of the Trustees Deed will trigger a reassessment of the current tax year and your friend may receive a credit if the prior assessed value was greater than your friends reassessed value. If your friends reassessment is higher then they will be sent a supplemental tax bill. Property taxes are a pre-lien on every property and therefore superior to all other liens.


#3

What if there is a surplus?

I.e., even after all Jr. liens and encumbrances are paid, there are excess funds to be distributed back to the borrower.

Is there any way to get the Trustee to pay the property taxes in that scenario? Seems unfair that the borrower irresponsibly fails to pay property tax, but gets a check paid out of the foreclosure proceeds.


#4

Hi Buyer, You are buying the lien position of the foreclosing Deed of Trust and you are responsible for any senior liens or loans. If there is a surplus that goes back to the owner. You purchased the property knowing that you would have to pay the taxes and any senior liens or loans. Not sure why you think you should benefit from any surplus?


#5

Thanks. Just being hopeful, I guess.

Here’s another question. The property was managed by a receiver from Feb to mid May. During that time, the April property tax became due/delinquent.

There was enough cash flow from the property for the receiver have paid the property tax, but he did not.

Should he have? The surplus funds will be interpled by the receiver with the court, I wonder if I might have a claim for the payment of that property tax.

Thanks again!


#6

Hi Buyer,
If you buy the property at trustee sale you are responsible for any senior liens and loans which includes the property taxes and past due property taxes. It does not matter if the receiver has the fund to pay the taxes, you have no control over that. You must pay any and all property taxes and any other senior liens or loans in front of the Deed of Trust you are bidding on.


#7

Actually, that only turned out to be partially true. I got the receiver to pay the property taxes that fell due during the receivership! Saved me $5K.