[WSBARP] Tax Deed/Sale Unique Situation

[Eric Nelsen]

If I remember my tax sale research right from five-six years ago, a property tax foreclosure wipes out ALL encumbrances on the land--mortgages, easements, everything. So I think third party owns that parcel. I'm not positive but you might research if the property tax foreclosure has any effect on statute of limitations for adverse possession. The ownership of the house also is in question, I think. If it is truly straddling the line in a fashion where it is ambiguous which tax parcel it should properly "belong" to, then it is a real muddle and I have no clue what to suggest in terms of who has true ownership.

I think the practical solution is for the buyer to order a preliminary commitment and see what the title company is willing to insure. I would bet that the title company is going to vest the foreclosed tax parcel with the third party buyer, and the other tax parcel with the bank, and have another exception about ownership of the house.

If someone wants to buy both parcels, I think the safest route would be to negotiate with the bank, and also contact the third party and offer them something, and use the fact of the third party's claim as leverage against the bank to reduce the purchase price from them. Then get deeds from both the bank and the third party.

Sincerely,

Eric

Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1417 31st Ave South
Seattle WA  98144-3909
phone 206-625-0092
fax 206-625-9040

Please Note that We Have Moved. We have moved our Seattle office to Mount Baker Ridge (a small commercial community just above the I-90 tunnel). Our new address is 1417 31st Avenue South, Seattle WA 98144. All other contact information remains the same.

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Eric J. Dooyema
Sent: Wednesday, December 14, 2016 1:24 PM
To: wsbarp at lists.wsbarppt.com
Subject: [WSBARP] Tax Deed/Sale Unique Situation

This is going to read like an exam question...but any help would be most appreciated...

A house sits on two parcels; the property line goes through the house. The parcels have been owned in common since the house was built in the 1950s (and probably before). The last owner acquired both parcels in 2005 and took out a loan using both parcels (and the house) as collateral. In 2011, one of the parcels was sold at a tax sale for delinquent property taxes to a third party. In 2016, the bank foreclosed on both parcels and obtained and filed a Trustee Deed listing both parcels. According to the assessor the Bank owns both properties. Let's assume that all proper notice and other requirements have been met.

A new party wants to buy both parcels from the bank.

Last fun fact, the tax sale parcel is landlocked.

1. Did the bank have a right to foreclose on the tax sale parcel?
2. Who owns the tax sale parcel now?
3. Will potential new buyer be able to get title insured on tax sale parcel in a purchase from the bank?
4. Any other issues or remedies that come to mind?

The facts that the house sits on both parcels and they were divided by the tax sale, it seems, are very unusual.

Please feel free to email me directly or call...thanks so much.

Eric at dooyemalaw.com

Eric J. Dooyema
Dooyema Law Office
624 W Hastings Rd Suite 12
Spokane, WA 99218
509-474-1685
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