Who Pays Foreclosure Property Taxes?

When you purchase a foreclosed property, are you responsible for back taxes?

The general answer largely depends on when you buy the property.

“If the property was foreclosed and possessed by the bank, the bank will have to pay the back taxes to sell the property with clear title,” says RealtyTrac spokesman Daren Blomquist. “However, if you purchase the property at the public foreclosure auction (on the courthouse steps) then you will be responsible for any senior liens, and property taxes fall into that category.”

With a short sale the situation is different. A short-sale is not a foreclosure. It’s a transaction where the lender agrees to allow a sale without a foreclosure even though the entire mortgage debt is not being repaid. In terms of property taxes a short sale is simply a sale with property taxes to be paid at closing. Who pays the property taxes? In some jurisdictions there is a tradition that the buyer will pay or that the seller will pay, but the issue can typically be negotiated.

For local practices speak with a nearby real estate broker or attorney who specializes in foreclosures.

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