Can anyone pay your property taxes?

[Jf24]

A month ago my wife tells me that she heard from someone that when your mortgage is in long default (have not got served with FC papers yet, BK final in Oct 2012) your property taxes may be paid by someone and they own a piece of your house or property. I didn't believe it and shrugged it off.

Weird that the other day I get an advertisement for a local store at my home and pobox address with a totally strange name on it. I googled the name and the person on it owns a title company.

Has anyone heard of this situation?

[AngelinaCat]

It sounds as though someone has applied for and gotten a tax deed on your property. What state are you in? The laws vary by state. Here is a link to the Duval County Fl Clerk of Courts website regarding tax deeds:

http://www.duvalclerk.com/ccWebsite/TaxDeeds.department

Plus, do a 'google search on 'tax deeds' and all sorts of sites for information come up--some more reliable than others...

It may also just be happenstance that a piece of mail comes to your PO box with a strange name on it. We get those all the time, and my PO box number has been in my family since 1961.

[Jf24]

New York

Got it at Po box and street address, both on record. And the person works on mortgage titles.

[Jf24]

Doesn't the mortgage company pay taxes and insurance when in default? At least that is what I thought.

[justbroke]

Doesn't the mortgage company pay taxes and insurance when in default? At least that is what I thought.

Not always! The taxing authority or insurance company would need to have placed the bank on the mailing list. If you do not have the taxes and insurance escrowed, not all tax/insurance agencies are notified when you fail to pay.

I agree with Mrs. Cat. This reads as though the property tax was not paid and a tax certificate was sold to an investor. I actually like the tax certificate process as it allows local municipalities to continue functioning even with a shortfall of taxes being paid. The investors "pay" the tax and get to enjoy an interest rate from 0.25% to 18% per annum (in Florida). They then get to file for a tax deed 2 years later. Most investors are not looking for title to the property; they want the 18% return on investment.

The only way to check, is to either go to your local taxing authority or visit the Web site for the taxing authority. At least in Florida, we can look them up by county and it is quite easy to see that a tax certificate was sold! (Plus your property tax account should show as delinquent for the year in question.)

[Jf24]

Bottom line. What happens if the tax cert was sold. Will try again to do a mod with the credit union. Does this investor have any ownership in my house? We want to try to stay in the house.
Thanks.

[justbroke]

Bottom line. What happens if the tax cert was sold. Will try again to do a mod with the credit union. Does this investor have any ownership in my house? We want to try to stay in the house.

Mrs. Cat provided a link to how they work in Florida.

Generally, a tax certificate is sold to an investor. Depending on your State, the investor generally "sits" on the tax certificate for 2 years before they can seek a tax deed. During those 2 years, the investor is entitled to accrue interest of up to 18% per year against the tax certificate (as well as some other fixed "costs"). After 2 years, the tax investor can decide whether they want to apply for the tax deed and force a foreclosure, or continue to just accrue interest. The investor will "eventually" be paid by either the bank, a subsequent buyer (at closing), or the homeowner. I don't understand the details of the risk, but there is risk to the investor. (I guess a risk could be some sort of loss of the property due to causality... but I am unsure.)

A tax certificate is not a "deed" or title to the home. They just hold a certificate that can be exchanged for a tax deed after a period of time. That period of time is known as the redemption period. It offers the homeowner (or bank) the opportunity to pay the investor the taxes and accrued interest (and fixed fees) to clear the certificate. If it is not redeemed, the investor can apply for the tax deed and then move to foreclosure. In homes where they are encumbered by a mortgage the tax certificate investor may need to pay 50% of the home's value in order to get the tax deed. If you are buying tax certificates to acquire property, it's probably not the best way unless you only go after unencumbered homes and you know what you're doing.

Sorry for writing so much. The answer is still no... they do not own the house nor do they have ANY ownership interest in your home. They do, however, have a tax lien.

[Jf24]

A lot to digest but thanks for all the info. Very interesting. You did relieve some pressure off my chest for the weekend. Thanks

[justbroke]

If the tax certificate has been there for 2 years, you may have issues. I just had to help my mother with an Estate issue where they too did not know the tax remained unpaid on an estate property. They didn't know until they received foreclosure paperwork as the tax certificate holder moved to foreclose! (The property was unencumbered.) it was not pretty, but we straightened it out by redeeming the property.)

So, not to frighten you or cause any angst, but you should check the status of your property taxes.