[WSBARP] Tax Sale

Fri Jul 24 11:37:13 PDT 2015

Had one a couple of years ago with an investor who purchased a house at a
county tax sale out in the Columbia Basin where he held it for more than
three years and then came to me for the closing of the sale of the property
to the tenant who'd been in the house for the past 3+ years (owner real
estate contract).  The preliminary title commitment/local title company
refused to insure the transaction as they were taking the position that
there were numerous irregularities regularly occurring with tax sales by
the local County Treasurer’s office and *would only insure title after 10
years*.

After picking up my investor client off the floor I then picked up the
phone and called another title company who then immediately issued the
preliminary title commitment without issue (ultimately final) and I closed
the sale without issue.

Each title company has widely varying underwriting and it always pays to
shop title companies.

Please note that effective May 15, 2015, my new address is 7 South Howard
St., Suite 218, Spokane, WA 99201.  All other contact information remains
the same.

*Robert R. Rowley* | Attorney at Law

7 S. Howard St, Suite 218

Spokane, WA  99201

Telephone: (509) 252-5074

Mobile: (509) 994-1143

Facsimile: (509) 928-3084

Email: rob at rowleylegal.com

Web Site: www.rowleylegal.com

Practice concentrated on business, real estate and general legal matters in
Washington and Idaho.

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*From:* wsbarp-bounces at lists.wsbarppt.com [mailto:
wsbarp-bounces at lists.wsbarppt.com] *On Behalf Of *John McCrady
*Sent:* Friday, July 24, 2015 9:11 AM
*To:* WSBA Real Property Listserv
*Subject:* Re: [WSBARP] Tax Sale

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 <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

www.doranlegal.com
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