I received a property tax bill after selling the house, now what? What happens when real estate taxes are still in the seller’s name years after closing?
Q: I owned a house for six years and then sold it. It appears the new owners never put the home in their names. Three years later I found out that the taxes on the home have not been paid during those years. The taxes are still in my name. If I pay the taxes, to keep them from being a problem on the home I now own, how do I go about regaining ownership of my old home? I have tried for months to get the new owners to make arrangements to pay the taxes but to no avail.
I Received a Property Tax Bill After Selling the House, Now What?
A: We must start with the question of whether the home you sold is in your name or the name of the buyers. We’re pretty sure that if you closed through a title company, settlement agent or closing attorney, the home is now in the buyers’ names. At that closing you would have delivered certain documents and one of those documents would have conveyed your interest to the buyers.
It’s more likely that the home is now in the buyers’ names but the local office that collects real estate taxes has not updated the taxpayer name in their records. In most jurisdictions, the real estate tax obligation goes with the owner of the property and does not follow that owner after the owner sells the home.
Think of it this way, if you have a credit card and make charges on that credit card, those charges are your personal obligation to pay. If you move, change jobs or take out new debt, you continue to be liable for the payment on that credit card. The credit card company can sue you wherever you are for payment.
More often than not, real estate taxes owed are the responsibility of the homeowner. When you buy a home, you must pay the real estate taxes on that home. If you sell the home and have not paid the real estate taxes, the buyer of your home would then become liable to pay those unpaid real estate taxes.
What Happens When Real Estate Taxes Are Still in the Seller’s Name Years After Closing?
Local real estate tax offices don’t want to chase after delinquent homeowners for unpaid real estate taxes. Those taxing bodies only need to go after the property. When a homeowner fails to pay real estate taxes, the unpaid taxes become a lien on the property. As a lien on the property, the taxing authorities can sell off the rights to collect on the amount owed and the tax buyer can, after a certain amount of time, become the owner of the property. We’re simplifying how the process actually works, but if the homeowner doesn’t pay his real estate taxes, then the taxing authority sells those taxes and the tax buyer brings the taxes to current. If the homeowner still doesn’t pay the amount owed with interest and penalties after a set time (to reimburse the tax buyer for the amount of the unpaid taxes plus interest), then that tax buyer can get the deed to the home and becomes the new owner of the home.
Of course, there are times that no tax buyer steps forward to buy the taxes on a particular home. This is typically because the amount of the taxes owed exceeds the value of the property. In this situation, the local municipality can eventually take over ownership of the property due to unpaid taxes.
Having said all that, you should check with the tax collector’s office where your old home was located, and find out what the process needs to be to have the tax bill put into the name of your buyers. It may simply be that the buyers forgot to put in a change of name and address form with them. You might be able to put that form in and then move on.
For any other situation relating to your real estate taxes, you’d probably want to talk to a real estate attorney and see if there are other circumstances that surround your situation that could lead to a different outcome.