Expert: Toni Yates - 7/24/2008

Question
I'm currently leasing a home that i want to purchase, but the current owner at this time owes taxes and has only been the owner for less than 2 years. Owner was currently living in the home but last minute thing decide to move cities and left the house for rent. I came in a now she wants to sell it to me but told me she owes taxes on it. She doesnt owe it yet she has only been paying for less than 2 years. Please advise!

Answer
Hi Maria-
Thanks for the question. If the owner has a mortgage on the house, it generally includes escrow for taxes meaning that payment for the taxes is collected as part of the mortgage payment and paid by the mortgage company. It is possible this may not be the case. You can usually call the county (Tax Assessor's or Treasurer's office) and see what the taxes for the property are and if they have been paid. Generally, a title search (done by the attorney or title company handling the settlement) would identify any shortfall and they would be paid from the seller's proceeds in order to transfer clear title to you. I highly recommend that you have an appraisal done (which will probably be part of your loan process) in order to determine the fair market price for the home, particularly as home prices have dropped in most places in the last 2 years. I also think you need an attorney to help you with the contract for sale. Hope this helps. Best, Toni