[WSBARP] Senior Citizen Deferred Property Taxes & Foreclosure

[Danielle Flatt]

I have a client who purchased a property at a foreclosure sale ~8 months
ago.  The previous owner had his property taxes deferred under the senior
citizen/retired person deferral for most of the 1990s.  This week, client
got a letter from DOR demanding payment of the previous owner's delinquent
deferred taxes now that the property has been sold.

In my initial conversation with the DOR auditor, I was told that ordinarily
the deferred taxes are collected during the sale and forwarded to Deferred
Tax department, but since somehow that didn't happen with this foreclosure,
the purchaser is responsible.

RCW 84.38 says that deferred taxes become due when the property is sold,
the person dies, the property is taken through eminent domain, or the
person stops using the property as their permanent residence.

Has anybody encountered this before?  How are deferred taxes usually
collected?  Are they supposed to be disbursed to the DOR from the sale
proceeds by trustee?  Can one successfully argue that since a foreclosure
is not a voluntary transfer/sale, the purchaser should not be liable for
the previous owner's delinquent deferred taxes?

A foreclosure is exempt from real estate excise tax, so I'm curious if a
similar argument can be made for unpaid deferred property taxes.

Thanks for your insight!

Best Regards,

DANIELLE FLATT | ATTORNEY | DIMENSION LAW GROUP PLLC
234 SW 43rd St, Suite MA | Renton, WA 98057
t: *206.973.3500 *| f: *206.577.5090*| e: *danielle at dimensionlaw.com
<danielle at dimensionlaw.com>*| www.dimensionlaw.com

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