Dear Jacob,
This is SUCH an interesting discussion!!! Not just the initial "jaw dropping" proposal by the seller, but also all of the wonderful comments above!!! It's been a real eye-opener for me, in some ways.
I agree with any/and all the details posted by members who feel that further research/title work needs to be done!
In addition, I might have a tiny bit of contribution that could help:
All counties in Pennsylvania will follow State Law, with regards to tax delinquent properties. However, each county may have their own way of "interpreting" the law and/or applying the law, and/or chosen methods by which they apply the law.
Although you are in Pittsburgh, the seller is 3-hours from his property, so I don't know in which PA county it's located.
If he thought he "lost" the property 6 years ago (because of bankruptcy), then he probably would not have paid any property taxes since then. SIX years is getting dangerously close, in most states, to a property being offered up at a "tax deed auction".
BECAUSE OF THIS, before proceeding with ANY commitment to obtain the property directly from the owner, please consider these suggestions:
-- $20k in miscellaneous liens -- because of the seller's story about his neighbor, I'm guessing that at least some of the liens are from "code enforcement" for nuisances such us overgrowth, etc. BE SURE to learn what ALL of these liens are for, and to whom!!!! Why? Because if you were to purchase this property at a tax deed auction instead (soon?), all NON-governmental liens would be wiped out (including mortgages with for-profit companies, private individuals, etc., or liens with companies where the property's equity was used as collateral). The liens that would continue "clinging" to the property after purchasing at a Tax Deed Auction are government-related liens (i.e. code enforcement fines, etc.) Contact me if you need further clarification these.
-- $20k in back taxes -- they'll need to be paid, no matter what, eventually. However, since it may have been 6 years since they have been addressed, you should get on top of that right away!!! If it were me, I would contact that particular county ASAP, and learn the exact status of the property regarding it's delinquency status? (i.e. is it due to be auctioned soon? has it already been auctioned, yet there was no bid? etc.) Then ask any additional questions you deem fitting, for your situation (i.e. Let's say that they tell you it is scheduled to go to auction in July 2016, unless back taxes are paid in full. Perhaps your next question could be, "If I paid just the OLDEST year [or two] of back taxes, would it keep it from going to auction?") I thing THIS is what you were looking for, in order to "flip" it yourself, right? That would "buy you some time" and free up your current funds to spend on rehab, so that you could sell it for profit (out of which the remaining taxes would be paid).
This COULD be an awesome opportunity!!! ...and I hope that's exactly how it turns out for you!!!
It could also be an excitement-filled "dud" -- which I hope that it isn't.
YOUR BEST BET is to really figure out WHICH ONE it ACTUALLY is, before committing!!
Currently, I'm focused on Florida. But I live a short 2 hours from you, in Ohio. Therefore, I have also dabbled in both Ohio & Pennsylvania... Perhaps in the future, we'll attend the same BP meetup, and/or be able to mutually be each other's "adviser", or perhaps even work on a deal together!
Looking Forward!!!!!!
Cheryl
