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TJ, Esq.
TJ, Esq., Attorney
Category: Real Estate Law
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Experience:  JD, MBA
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Property taxes after chapter 7 I own a house in WA and have

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Property taxes after chapter 7

I own a house in WA and have filed chapter 7 and won't be reaffirming the mortgage or HELOC (ie. I'll let the foreclosure process run its course). The mortgage company (Wells Fargo) has always paid taxes and insurance out of an escrow account that was supplemented by a portion of my mortgage payment, which I have not been paying for 6 months.

Am I responsible for property taxes after bankruptcy and if so, would that go away once the house is foreclosed on? (ie. would the county recoup all owed taxes from the proceeds of the foreclosure sale)
Hello and thank you for allowing me the opportunity to assist you.

Q: Am I responsible for property taxes after bankruptcy and if so, would that go away once the house is foreclosed on? (ie. would the county recoup all owed taxes from the proceeds of the foreclosure sale)

A: Taxes do not generally get discharged in bankruptcy. However, you should not have any problem with property taxes. Unpaid property taxes become a lien on the property in question. That lien is, by law, superior to all other liens, including prior recorded mortgages, etc. Accordingly, if the property taxes are not paid, then eventually the house will be sold and the taxes paid. The county wouldn't go after the former owner. Mortgages and other liens will be wiped out if the tax lien is executed. Because of that, lenders usually pay the taxes themselves so that they save their liens.

The botXXXXX XXXXXne is that you shouldn't have to worry about property taxes.

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Customer: replied 3 years ago.

Would this apply to what I read about "zombie foreclosures" (see: http://www.huffingtonpost.com/2013/03/30/foreclosed-zombie-homes_n_2974263.html )? This is where a bank alerts the home owner about a foreclosure sale that later gets cancelled for whatever reason and the home owner is not informed, then finds out later they're still responsible for taxes because their name wasn't removed from the deed.


 


If you're still liable for taxes in that case, you're saying just ignore any tax bills and they'll get taken care of when the house is eventually sold/foreclosed on?

Hi again.

Yes, it applies to "zombie" properties. Back taxes are not usually a problem. What is a problem with zombie properties are HOA fees and maintenance fines, etc. The taxes are not usually a problem because of what I posted earlier. However, HOA fees can accumulate, and the record owner is still liable. The HOA may sue the record owner even if he hasn't lived there for years. Similarly the record owner is still liable for maintaining the property, and I've seen situations where a county fined a person several hundred dollars for failing to maintain property that was not lived in for years. One thing to consider is that even if the lender does not foreclosure immediately, then offer to give the keys to the lender. If the lender accepts the keys, or even has the locks changed, then at least with regard to the county you'd have the argument that although the property is in your name, the lender has possession and should be liable for maintaining it. That worked in a case that I worked on a few months ago. The county was threating to fine $500 per day, and my firm got that taken care of because the lender had put its own locks on the doors.

I hope that helps.
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