Expert: Dick Dennis - 11/8/2010

Question
QUESTION: I have found a house that the owner hasn't paid the taxes on in several years. I am not certain if the debt has gone to lawsuit or not. I have spoken with the owner and he is willing to owner finance the house for me for the amount needed to pay off the taxes owed and a small bit more for himself. Can this be done with outstanding taxes owed? How do I protect myself so that the back taxes are paid and the house is not seized by the city? We are in Fort Worth TX. Can you please give me the scenarios depending on whether it has gone to lawsuit or not?

ANSWER: Very simple, Noah. The transaction is expressed in a purchase agreement with the amount of down payment and/or cash involved expressed when it is presented to the escrow company or title company that handles the closing. The escrow or title company will make sure all taxes, and any other liens that are not supposed to there, are paid before closing.

When the transaction is presented to the closing company, you will know if you are setting all right. They will let you know before you actually close if your money you agreed to pay will cover everything needed, including the taxes. Be sure you get title insurance (and probably pay for) in the process. I wish you well.

Dick Dennis
dixiedee13@aol.com

---------- FOLLOW-UP ----------

QUESTION: Actually, I know for certain that the money we can give him down will not cover the taxes, and I'm pretty sure he doesn't have it. Is it possible to arrange for the back taxes to be paid from our monthly payment, even if the city will only accept the lump sum?

Answer
Unless your credit is very good, Noah, and you can get a loan from a legitimate lender somewhere, I do not see much hope for you. If you have a relative or friend who is willing to help you in the purchase of the property and making sure the property taxes are paid in the process, I doubt any county anywhere in the country would allow you to pay it off monthly. But you can certainly ask. Just maybe your county has such a program. Ask.

Dick Dennis