Question: Do The Banks Have To Pay The Property Taxes on Foreclosed Homes?

[Yavin4]

If a bank re-takes ownership of the property through foreclosure, do they have to pay property taxes?

If so, this could be an enormous liability on their part.

[flvegan]

1. Yes.

Taxes, insurance and maintenance if they take fee simple title via foreclosure.

[dkf]

2. I read about a condo assn suing a bank for

maintenance fees.

Banks are not in a good place.

[flvegan]

7. Condo fees are another issue.

Condo fees and homeowner's association fees continue to accrue. If the bank is the successful bidder at the foreclosure sale, they're on the hook for those fees as well after the sale until the REO sale.

Banks are in a great place IF the idiots in charge would figure out that default resolution would save them an absolute fortune and net them a Biblical profit in these days.

[dkf]

9. Here's the article...turns out the Association was foreclosing on the bank.

Condo Meltdown
Association turns the tables on bank

June 25, 2008 By: Paola Iuspa-Abbott

Bath Club Condominium

Condo associations that are in a financial bind from mounting foreclosures are now targeting lenders who have taken back units from owners in default but are themselves failing to pay their share of maintenance fees.

As more units end up in the hands of lenders, the banks and mortgage servicing companies are responsible for maintenance payments for those units. But administering the growing pool of real estate has proved challenging for lenders.

The Residences at the Bath Club Condominium Association in Miami Beach is pressing a foreclosure action against Wells Fargo as trustee for an investment pool that owns the mortgage on a unit that isn’t paying its maintenance fees.

The lender owes $32,252 in late maintenance fees on the unit it took back more than a year ago.

http://www.dailybusinessreview.com/Web_Blog_Stories/June/Association_trns_tables.html

[flvegan]

11. They have every right.

In Florida, once you take title (in this case the bank after foreclosure) you start owing fees. Once you miss an association payment, they can file a lien, and then within a year, file a Lis Pendens and foreclose and take the property clear.

[spag68]

12. Something wrong here

The bank owes an amount equal to about 3000$ a month. I don't know anywhere except maybe assisted living that charges that much in fees. Typical fees in Fla range from 275$ to 400$ a month. That is not including mortgage payment. Miami Beach may be higher but 3k seems a bit much.

[dkf]

13. Place originally sold for $1.45 million.

Not your typical condo.

[drmeow]

3. I think they do

otherwise the state can seize the property and sell it at auction to recover the property taxes. The house we bought had that exact thing happen (bought sight unseen at auction by a broker who sold it to us 1.5 - 2 years later). I don't think it matters who the "owner" is.

[DJ13]

4. In theory, yes

But if they WERE paying the taxes, why do the cities cry poverty from the lost tax revenue resulting from the foreclosures?

Somewhere theres a loophole they must be exploiting.

[Yavin4]

6. Cities Are Crying Poverty Because...

Property values are declining, so the property taxes decline as well.

[drmeow]

8. Maybe because

the property values fall so they can't charge as much tax? If they seize the property, they may only be able to collect taxes on a value based on how much the house sells for at auction ... less than if it sold on the market.

[flvegan]

10. In many states the property sells for (at a minimum) the Final Summary Judgment amount

Which is what's due on the mortgage plus legal fees, costs, etc.

Problem is with the REO sales, after the foreclosure. The banks will blow a property that they foreclosed upon at an FSJ amount of $200k out for $100k if they can get it, especially if the place is aging or has been gutted. THAT is where the problem occurs.

[csziggy]

16. In Florida this whole thing coincides with a stupid change in the property taxes

An amendment passed last year cut property taxes by a significant amount. Sounds good, doesn't it? But in Florida property taxes are the main way that counties collect their money. So county governments in Florida are hurting, cutting extra services and trying to come up with new ways to get the money needed for basic services.

With prices on real estate dropping due to foreclosures (as said, the property is appraised at the last sold price), the amount of taxes the counties cut, and increasing numbers of people simply unable to pay their taxes prior to foreclosures, tax revenues are really low in many counties.

And the idiots that brought up that amendment that put Florida counties in this position are putting forward another one to cut property taxes even more!

[SoCalDem]

18. The loophole around here is this..

Taxes not paid... tax assessor sends notice to "owner"..they are gone, so the notice is returned.. then the assessors' office has to notify the "real owner"..the bank/mortgage company.. They then are "asked" to defer the taxes, until the property is sold, at which time the taxes owed will be added to the price and "settled" at that time..

The assessors' office does not want a bunch of houses that they willl then be responsible for, so they usually do just that.. they defer the taxes..as the property declines in value, gets vandalized, or just rots away, the liklihood of it ever selling, gets smaller and smaller.. Sometimes the banks will ask them to RE-evaluate the property for taxation purposes, so of course the value gets smaller, and so do the taxes..deferred or not..

Mulitply that by thousands of unoccupied/foreclosed on homes, and you see the difficulty of towns/counties/states...

[BlooInBloo]

5. I thought whoever owned the property had to pay the property tax.

[caseymoz]

14. Yes, they have to pay, and it is an enormous liability.

Yes, the banks pay property taxes. On top of having a foreclosed loan, it adds up to a huge liability. They might try to pass them off to the next owners, though. How much they will do that depends on state law, and what the market will bear.

I don't see too many For Sale signs in my neighborhood, but I do see houses for rent. That's one way the banks will try to get some cash flow from the properties. Definitely people losing their homes are re-entering the rental market. Just to keep the houses occupied, I could imagine banks foreclosing on a family's home and then actually renting it to the same family they foreclosed on.

Banks are going to get desperate as they have to foreclose on more property.

[sam sarrha]

15. the loans are bundled and sold all over the world,

[pitohui]

17. NO *you* will have to pay, a story based on my experience

i have a foreclosed home, long story short, we learned that the property tax hadn't been paid in years

i got my "corrupt" assessor to nod nod wink wink and he wrote it off, as he did for everybody back in the day who was a genuine homeowner not a businessperson

my "corrupt" assessor (really a decent guy trying to help people out) went to jail and now we have a "non" corrupt piece of trash who exists only to screw the little guy

assume if you buy a foreclosed property that NO tax has been paid and it's up to YOU to pay

we were naive and were given a helping hand but the GOP fuckwits have made sure that only their buddies and not the little guy will ever get the same helping hand

YOU will pay, so don't buy a foreclosed property without proof the tax has been paid (and it hasn't been)