[WSBARP] Tax Sale

[John McCrady]

Property taxes are a first lien; the foreclosure will wipe out your client's deed of trust.
There is no redemption from the tax sale.  There are certain rights to challenge the tax sale, due to lack of notice or a claim of incapacity for instance, but they are extremely limited.
If your client buys at the tax sale the client will have a three year period where it will be difficult to obtain title insurance (due to the right to challenge the sale referenced above.)
Your client's deed of trust probably contains a provision allowing the client to pay the delinquent taxes and add the amount paid to the balance owing.  This would usually also constitute a further default on the obligation.
The best course may be for the client to pay the taxes and foreclose.

I would be interested in reading other ideas.

John McCrady
Counsel
Puget Sound Title Company
5350 Orchard Street West
University Place WA 98466
253-476-5721

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Jim Doran
Sent: Friday, July 24, 2015 8:35 AM
To: 'WSBA Real Property Listserv' <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Tax Sale

Listies:

I have dealt with HOA line foreclosure Sheriff's Sales but never a county property tax sale.

Client has a Note and DOT with a balance of $15,000 +/-on it.  The deadbeat is about $4,000 behind on payments and is behind $8,000 +/- on real property taxes and this October if the taxes are not paid, at least in part, there will be a tax auction.

If someone buys the property at the County Tax Sale (I presume conducted by the Sheriff) do they take the property subject to my clients Note and DOT?  Does the deadbeat have a right of redemption for one year?

Can my client buy the place at the Tax Sale and get rid of the deadbeat?  Since client will have to pay the property taxes anyway if he forecloses, can he use the County Tax Sale as a way to get rid of the deadbeat.  If the client buys the property at the Tax Sale he takes it subject to his own Note and DOT which is fine.  If the deadbeat wants to redeem the property he will have to pay my client.  How can my client lose?

What am I missing here?  (I am sure that I am missing something.)

James R. Doran
Attorney at Law
100 E. Pine Street - Suite 205
Bellingham, WA 98225
(360)393-9506
jim at doranlegal.com<mailto:jim at doranlegal.com>
www.doranlegal.com<http://www.doranlegal.com>

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