Bank no longer paying taxes on home in default

[Chavis Atkins]

Hi, so I have a home that I found vacant and abandoned. Found this home almost a year ago but couldn't find the owner. Decided to go through my archives of homes I couldn't find the owner and decided to try facebook for this home's owner. Through relatives I find the owner and the owner agrees to sell me the home for 15k. It is a 3 bed 1.5 bath 1.3k sq ft with partial basement. 

She hasn't lived or had anyone in the home for 8 years now. She tells me she had a outstanding loan that was around 94k. Now I go to the Assessors site and it shows me her name still on the home and I went to check who is being mailed the taxes and it has her as the person to pay the taxes. Now the last thing recorded with the recorders office concerning the loan was that it was assigned to Chase in 2010. The mortgage was taken out in 2003 for 70k... now to the reason I'm on here.

She is willing to sell the home to me for 15k and out of that 15k she will pay her closing, back taxes and the other small liens recorded against her. We know she the owner of the home but not sure if the bank has dropped the home from their portfolio because the home is behind on taxes 2.5k and could be going up for tax sale this summer. The amount of 500 is due this May 11th along with what will be due for fall semester another 500 which is a total accumulation of 3.5 that needs to be paid. 

Don't banks pay the taxes on the home for however long so that they don't lose it a tax sale? Why would the bank stop paying taxes and let it get this far? Have the bank stopped paying and just have yet to record with the recorder they are releasing the mortgage? I would appreciate someone experienced with a situation like this as this isn't the only home I found like this, there is many more that I see that people have walked away a long time ago, home is not being taken care of by anyone and the taxes are behind but the owner has a outstanding mortgage.

[Blair Poelman]

@Chavis Atkins

i'm not saying it's pointless. I'm saying if you want a clear title free from the encumbrance of a past unsatisfied mortgage you will have to do a quiet title action OR you can satisfy the mortgage.  That mortgage isn't going away without either the mortgagee releasing it, or having a court remove it.

My experience is the county tax sale in Marion County does not extinguish the interest of previous parties.  I've paid a lot of $$ for quiet title actions across more than a dozen properties in Indiana that will prove that.  I don't know about Lake County, but I would assume it's the same.

Buying a tax lien doesn't give you title.  You might be able to do something with the tax lien, but your name will not be on a deed. If you want to be on title you've got a completely different process to foreclose on that tax lien - that process involves paying off any other tax lien holders on that property, along with other steps that are specific to the county and/or state.  I'm not aware of any way to do a quiet title action on taxes, but if anybody knows how I'd be willing to pay a few bucks to hear how :)

Buying a tax DEED (county tax sale) MAY put you on title (depends on how they do it in Lake), but it doesn't necessarily mean that title is clear.  In my experience it is usually not clear, but not impossible to clean up.

I would advise that before you spend your money at the tax sale, or buy the property without a release of that mortgage, you do your homework. Ask around your local REIA and find an attorney that has worked these titles pot-tax sale. They will be a great source of info. it's also a good idea to do a PR prior to bidding and buying. That title might have a 2nd, or 3rd, or health code violations, or IRS liens, or other gremlins.

The quiet title action in this scenario should go the same as in any other scenario in that county - best to get specifics from an attorney.