Legal Question in Real Estate Law in Pennsylvania

Re: back taxes on a house

You asked about owning property because it has back taxes on it.

Dream real hard. Depending on your location properties are often siezed for back taxes and then sold at sheriff's auctions every so often. You can check with your locality to see when these auctions are held.

Tax sales, while hyped in get rich quick schemes, really don't pan out very often. The property is sold at auction to the highest bidder for the taxes owed. The property remains encumbered by any liens that are attached to the property, such as mortgages or mechanics liens, even various notes or other debts can be attached.

When a property is sold at tax sale, the locality gets its tax money first. If there is any excess it goes to the persons with priority liens on the property. If the house is free and clear, the title owner has a period of time during which they can reclaim the house by only paying the tax sale buyer the taxes paid and the statutory interest rate.

If the tax sale doesn't generate enough to satisfy the liens on the property then the liens remain and the lienholders will foreclose. Often, properties are allowed to go to tax sale because they are upside down. That means the property is currently worth less than the value of all the encumbrances on the property.

If you would like to buy a prperty at a tax sale, do your homework. Find out all the impending problems and deal with them beforehand. better yet, forget about tax sales because there are so many traps that can put you into the poorhouse quite quickly. (For example, you buy the property, and pay off the remaining liens. The title owner can possibly reclaim the property just by paying the tax amount and statutory interest. You are left holding an unsecured claim for the amount of the liens that you paid off. Owner can then go bankrupt, strip the equity and leave you with a big empty bank account.)

There are ways you possibly could salvage the house you are renting but you need a good real estate attorney near you to help you get it right.

Regards,

Roger