Consider Your Options When A Property's Taxes Aren't Up To Date
One of the many reasons that it's important to hire a real estate attorney when you're shopping for a property is that he or she can dig into the property before you complete the purchase. Your real estate attorney will be looking for all sorts of red flags, including issues with the property's property taxes. In some cases, the attorney may learn that the current owner of the property hasn't paid his or her taxes in full, which can potentially leave you facing the bill after you take ownership. Once your attorney reveals this unfortunate news, here are three options that you should discuss with your attorney and your real estate agent.
Making A Conditional Offer
One way that you can deal with this less-than-desirable situation is to make an offer on the home that is conditional upon the seller paying the property taxes. This way, you won't risk losing the house by someone else buying it before you can buy it, but you also will have an ability to back away if the owner doesn't pay what he or she owes. Of course, you'll want more than just a verbal confirmation of the owner paying the tax bill. He or she will need to submit a financial statement for your attorney to review.
Deducting The Amount From Your Offer
If you're really keen on getting the property, another option that your attorney and agent might deem to be worthwhile is to make an offer — but subtract the value of the outstanding property tax from it. For example, if you're planning to offer $265,000 for the house, and the owner owes $10,000 in unpaid property taxes, make your offer $255,000. This way, you may quickly be able to complete the sale, and even if you have to pay the taxes yourself you won't technically be out any money because you were able to get the house for less.
It may be a difficult decision to make, but there's some value in deciding to walk away from the property once your real estate attorney indicates that the owner has not paid his or her property taxes. Walking away can be preferable to getting into a financial and legal battle with the owner. Additionally, an owner who fails to stay on top of the property tax could be neglectful in other ways — for example, by failing to perform critical upkeep tasks on the home. This could lead to unpleasant surprises for you if you were to make the purchase.