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You could be faced with paying the back taxes if:
1) The seller inherited the property as part of an estate that took 2 years to work out in the court system. During that time, no one in the extended family wanted to take on the tax burden because they did not know if it was going to become their property.
2) The property owner is selling the property to settle the debt / vendor's liens they owe. As a result, they will often not pay the back property taxes since they know those will not trigger a "tax collection" or "tax deed" until a few years later. In the meantime they are making minimum payments on the debt.
Either way, a seller with tax debt is admitting they can't afford the property and it can often be a good negogiating tool for the wise buyer.
A real estate attorney should be used to perform a full title search on the property and ensure that you do not take on any unforeseen unpaid debts. Specifically IRS debt that is not always explicitly disclosed to the new buyer.
Another consideration of the buyer having to pay back taxes is if the seller doesn't have money to pay the taxes, the property probably hasn't been maintained very well, if at all.
I see one property for sale and was being told by the realtor that back taxes would be my responsibility. Why is this? Is this even legal only under what circumstances?
You apparently misread what I wrote. IF title insurance is to be obtained as part of the purchase, a title company will require that the back taxes be paid off at closing. Of course, if you get title insurance on a property and later fail to pay the taxes, the title insurance company isn't going to pay the taxes.
What state requires title insurance?
I think all of them but Iowa. They still use abstracts. The state refuses to let title insurance in as its a scam.
If it's not required, why buy it? 30+ years ago I worked as mortgage banker. They gave us the cost of title insurance and we figured it in. Nothing was ever said title insurance was an option. So gave me idea you had to have it. Even if your house is paid in cash. Yeah I'm sure owners of mortgage companies were getting kickbacks.
It really is a scam, payout on it is like one tenth of a percent.
I think all of them but Iowa. They still use abstracts. The state refuses to let title insurance in as its a scam.
If it's not required, why buy it? 30+ years ago I worked as mortgage banker. They gave us the cost of title insurance and we figured it in. Nothing was ever said title insurance was an option. So gave me idea you had to have it. Even if your house is paid in cash. Yeah I'm sure owners of mortgage companies were getting kickbacks.
It really is a scam, payout on it is like one tenth of a percent.
Michigan doesn't require title insurance--although it is usually obtained for most transactions. I agree, however, that the payout rate on title insurance is very low.
People buy it for the same reason that they buy any insurance. That's why insurance companies always try to scare people with worst-case scenarios. Yet, insurance can come in handy.
You apparently misread what I wrote. IF title insurance is to be obtained as part of the purchase, a title company will require that the back taxes be paid off at closing. Of course, if you get title insurance on a property and later fail to pay the taxes, the title insurance company isn't going to pay the taxes.
What state requires title insurance?
Yes we bought a home, with title insurance & at the first tax bill in the mail, we found out that several thousand dollars were owed. The title company paid them, as it was their fault for not doing a thorough check. Of course, all subsequent taxes were paid by us.
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