My understanding is that the lender holding the mortgage on the property MUST be properly notified about the taxes owed before they can just get the tax deed. Once the lender is notified, which I’m sure they have been already, they will end up paying off the tax bill to protect their interest in the property. They will add all that cost and expense involved onto what the property owner owes on the mortgage.
Sometimes, even though the lender has been properly notified they may screw up and let this slip through the cracks where they lose their position as a secured creditor against the property. My understanding is this sometimes happens when a mortgage has been sold and transfered to another lender. Everything gets shuffled around in the paper work process and somehow the taxes don’t get paid causing the lender to lose their position and have their lien wiped out! It does happen, but for the most part they will end up paying the tax bill to protect their position.
I have a seller who paid his mortgage but didn’t pay his property taxes for over two years. Checked with the county tax collector and total is $7,188 and tax deed will be issued on property if not paid by 7/12/01.
My question is if property is sold for taxes does this wipe out the mortgage lien? Is the owner then still liable for the mortgage balance?
I’m trying to determine how to give this guy some sense of urgency to sell his house to me and what he will face if he does’nt.
Re: QUESTION ON RE TAX LIABILITY - Posted by Bronchick
Posted by Bronchick on March 22, 2001 at 11:44:50:
The answer is yes on both. A property tax lien is always first in position, ahead of the mortgage. A sale for taxes wipes out the mortgage lien, but not the debt, so the owner is still liable for the note.