Back Taxes On a Property Im Interested In

[JHZR2]

There is a piece of property that Im looking to possibly buy, really good deal, would be useful for a number of things, etc.

Thing is, the owner currently owns it in the clear, but owes back taxes.

So here's the deal. I dont think its worth the assessment. And what Id buy it for (which is an agreed upon price with the seller) is nowhere near the assessment. So... That means that the taxes owed are also too high (they were taxed based upon a faulty assessment).

So the property currently has a lien on it from the municipality for the back taxes, with more coming due soon. To date, the town hasnt done anything about the owed taxes.

Is there and if so, what is the recourse for this? I dont anticipate the property going to Sheriff's sale anytime soon, so the real question becomes, how can I negotiate the back taxes down?

I get how one fights the assessment so that future taxes are lower, but is there an approach to fight the back due taxes? If I can settle them for pennies on the dollar somehow I wouldnt want to negotiate anything else with the seller... And I suspect that the seller wont be able to sell it without paying the taxes. I also doubt the seller would accept a "garnished" payment which would be our agreed upon price minus the back taxes...

So, any recommendations on an appropriate strategy here?

Thanks!

 

[Doog]

Contact the tax dept and make sure you have all of what will be owed and what the new assessment will be. Then negotiate the amount owed off the purchase price. Because if there is a lien it will get deducted anyway. Just make sure you don't get stuck if there is no lien from the municipality. I would also get an extra $30k over the price in title insurance in case someone else shows up with their hand out. Get a good title company to research it.

 

[JHZR2]

Yes but point is can I negotiate down what is owed? Or perhaps more correctly stated, can the current owner?

I think weve come to a price that is reasonable to the two of us in terms of the property's valuation. So the question becomes how to minimize the back tax due because (1) I dont care to pay it, and (2) he doesnt care to take less money then our agreed upon valuation.

I get it that this is part of the negotiation... But if were dealing with a faulty and inaccurate assessment anyway, is there a way to negotiate that to be retroactive? Essentially theyre better off getting something than nothing or doing a Sheriff's sale?

 

[Leo99]

If there is a lien on the property, the owner does own it in the clear.

My understanding is a tax lien means that if the property sells, the town will get their taxes at settlement. Is the owner ok with that? Then you're in the clear. The seller will get your payment for the house minus the money they owe the town.

So, either you pay the agreed upon price and the owner has the tax money taken out. You pay extra to cover the taxes. Or the owner negotiates the back taxes. You don't have legal standing to negotiate the back taxes. You don't owe them.

 

[JHZR2]

Originally Posted By: Leo99
If there is a lien on the property, the owner does own it in the clear.

My understanding is a tax lien means that if the property sells, the town will get their taxes at settlement. Is the owner ok with that? Then you're in the clear. The seller will get your payment for the house minus the money they owe the town.

So, either you pay the agreed upon price and the owner has the tax money taken out. You pay extra to cover the taxes. Or the owner negotiates the back taxes. You don't have legal standing to negotiate the back taxes. You don't owe them.



What I meant by "in the clear" was that there is no mortgage or financing associated with the property.

Youre right, I dont owe them. But Im interested in ensuring that going forward the tax rate is lower, and if the owed taxes can be reduced by the current owner, its a win for us both.

 

[bvance554]

Good luck. Its hard to make deals with any local government over taxes. They're not in the business, or position to 'deal.'

 

[Pop_Rivit]

Originally Posted By: JHZR2
Yes but point is can I negotiate down what is owed? Or perhaps more correctly stated, can the current owner?

It would be extremely rare to be able to negotiate delinquent property taxes. Your best bet is to contact a good real estate attorney and get an opinion-the regulations vary widely from state to state and you need to find someone who knows New Jersey delinquent property tax regulations.
Personally, other than investing in taxes at tax sale, I wouldn't touch a parcel that has delinquent taxes.

 

[jimbrewer]

In my jurisdiction, I think the only way back taxes can be compromised is if the property doesn't sell at a tax auction.

Getting the seller to recognize his property is worth just a few bucks over taxes is an uphill battle.

 

[MNgopher]

Around here, your odds of negotiating delinquent property taxes are about zero.

If the taxes are already delinquent, the period for appealing your assessed valuation has very likely already passed. Our drop dead date to appeal in Tax Court is April 30th for taxes due this year. Our first tax payment is due May 15. If its already delinquent, you missed the appeals date, and are paying interest and penalties.

Your best bet may be to talk directly with the property tax entity. Our property tax folks don't want properties to go tax forfeit, but they also don't negotiate on the back taxes. They are what they are.

 

[Wolf359]

I'm a real estate broker in MA and I've never heard of anyone negotiating back taxes. Highly unlikely. Really none of your business because you don't own the property. If you've agreed on a price, it's up to the owner to deliver the property to you free of any tax liens so it's really the current owner's problem. It's not your fault that the owner didn't pay them. The taxes go to city. They figure out an annual budget based on their tax base. Eventually they get their money one way or the other, there's really no need for them to negotiate a lower amount. You'd have to look up what the rules are for assessments, around here, we only get one month out of the year to file for an abatement, once you miss that deadline, that's it for the year, they can't retroactively lower the assessment. As they say, the only thing certain in life is death and taxes and even after you're dead, you get taxed. That why everyone hates them and there's no easy way out.

 

[eljefino]

We had a farmer in Buxton, Maine, who owed about 2.5 years back taxes and was able to negotiate them down. Once he had that worked out, he sold his property in the clear and ran off with the money. But maybe he bribed someone.

Make sure there isn't pollution you'd be obligated to clean up, stormwater fees, or other issues that don't show up under "normal" due diligence.

 

[Subdued]

The taxes are the current owner's problem. You shouldn't even be in the loop for that.

If he doesn't want to taxes deducted from his selling price he maybe should have kept up on his taxes.

 

[BMWTurboDzl]

Originally Posted By: Subdued
The taxes are the current owner's problem. You shouldn't even be in the loop for that.

If he doesn't want to taxes deducted from his selling price he maybe should have kept up on his taxes.


+1

Only the current owner can argue over the assessed value. The back taxes will be deducted out of the sellers proceeds.

 

[dishdude]

It varies from place to place, but most will only let you contest the assessment from the current year. I agree it's very unlikely you can retroactively get the assessment lowered for previous years.

 

[zzyzzx]

You can't negotiate back taxes. you just lower the offer price to adjust for all the back taxes that you are going to have to pay. Then get a reassessment.

 

[Wolf359]

Originally Posted By: zzyzzx
You can't negotiate back taxes. you just lower the offer price to adjust for all the back taxes that you are going to have to pay. Then get a reassessment.


Actually on the HUD settlement statement, the taxes owed will be deducted from the seller's proceeds. The offer price should remain the same. Buyer should take title to the property with all back taxes paid. Really a problem for the seller to figure out, it's his fault for not paying it. The property is only worth what a buyer is willing to pay.

 

[rjundi]

You can buy this property with liens as long as no mortgage on your end.

The tax lien is not on the owner of property but the property itself. The lien stays attached of course.

I have known folks to buy properties this way however they paid typically $1 or $1000 or even $10000 not market value. They then in turn pay the back taxes and move on.

My families "estate" was purchased this way back in the depression. A home, barn, and all equipment, land (150 acres) was purchased for $12. My great grandfather then paid the back taxes. I was reading the records recently while visiting. The back taxes were paid latter and a release of lien letter was included.

 

[Wolf359]

Originally Posted By: rjundi
You can buy this property with liens as long as no mortgage on your end.

The tax lien is not on the owner of property but the property itself. The lien stays attached of course.

I have known folks to buy properties this way however they paid typically $1 or $1000 or even $10000 not market value. They then in turn pay the back taxes and move on.

My families "estate" was purchased this way back in the depression. A home, barn, and all equipment, land (150 acres) was purchased for $12. My great grandfather then paid the back taxes. I was reading the records recently while visiting. The back taxes were paid latter and a release of lien letter was included.


I'm not sure if NJ is an attorney state or a title state, but regardless, the HUD is used as a settlement statement at the closing. Regardless if there's mortages or tax liens on the property, you would normally do a title search, those items would come up and would get paid off at settlement. There's two sides to the settlement statement, one side lists the buyer's side and the other lists the seller's side. It's really doesn't matter what the seller's side is for the buyer. It's really the sellers problem. All you have to do is agree on a price and the taxes will get deducted from the proceeds and the attorney or title company will have those paid off at closing. The real problem here is that the seller won't be happy with the proceeds he's going to get, but that's really his problem for not paying the taxes. It's like people who complain that they can't sell a car for less than the loan amount, really a seller problem for borrowing that much money and the same here for not paying their taxes, that deadbeat.

 

[hattaresguy]

It depends on the municipality but typically they don't negotiate back taxes to much unless its a large parcel with LOTS of back taxes. IE 7 figure or higher range.

I have bought a number of these, very simple.

Determine what you want to pay, lets say $100k, back out what it will take to settle the back taxes, lets say $30k in this case and that's what the seller gets.

At least in CT municipality's are very slow in taking properties back, they charge roughly 18% interest on back taxes so they love them. Typically it takes around 10 years for a tax foreclosure at least in CT, other cities and states will very.

If the seller balks he is not motivated enough, stay in contact until he gets more motivated.

 

[hatt]

Really not much to say. The seller owes the taxes. I guess you could call the property appraiser and see if they have a way to dispute the assessed value for prior years. Sounds like a long shot and a lot of work for someone else's benefit. He either sells at market value or he doesn't sell. No one is going to pay more cause he didn't like to pay his taxes.