Property Tax liability
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If I were to abandon my home, there’s still property taxes levied against it every year.
Am I legally liable for unpaid property taxes that accrue after I abandon the property?
At what point am I no longer liable for whatever property taxes that might accrue? Obviously a new owner would take on the responsibility but I’m thinking that it might not have a new owner for a good long time.
I’m asking because I live in a home with a bankrupt mortgage. I’ve lived in it for more than a decade this way and I’ve never missed or been late on a principal and interest payment – ever. The easiest way to explain my situation is if you imagine me renting my collateral from the bank every month.
It’s somewhat complicated for me to get clear ownership of the home and the present economic chaos has me considering the possibility of simply abandoning it. The bankruptcy means that I’m not responsible for any deficit between the principal balance of the mortgage and the subsequent sale price so I’m covered in that regard.
Does anyone have any relevant experience or knowledge they’d like to contribute?
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IANAL. And this is not an answer sorry. Years ago people in droves ran away from their homes in Detroit & for years they were still liable for property taxes. But then Detroit started bulldozing these houses at this point I think the property taxes were wiped clean.
But the real answer is I don’t know and I really think it’s city specific. So you have to consult your local laws.
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A few years back with the real estate boom, my area in FL was one of the top growing areas in the country. Then, when many could not pay for their homes when the bubble burst, they simply abandoned properties. The following is my understanding which relates to my area, check with your local county though.
When you abandon a property, the taxes continue to accrue and you are liable for them. However, at some point, the county will want their money and they are able to sell your home to the highest bidder. (My county still does this on a weekly basis!)
When the property sells at auction, you no longer own the home and therefore no longer held liable to pay any back or future property taxes.
The highest bidder wins, and now owns, the property. The back taxes/fees are paid from their bid. Sometimes the winner pays as little as just the balance of the taxes plus auction fees! Any overage though is paid to other lien holders. If there are no other liens, the person who abandoned the property is entitled to the overage paid at auction. (They’d have to track it down though, they are not usually contacted to claim it.)
The new owner now may be responsible to pay any other liens on the property, including mortgage, if the winning bid was not high enough to cover it all. However most will find a good lawyer and have the liens cleared so they can have a sellable title - then they flip and sell these properties.
Not knowing the area where you live and how much is owed vs. market price, I don’t know that I can share advice. If I were in your position and the home was in my area, I’d sell the house and walk away with (hopefully) some money in my pocket. Best wishes to you however you choose to move forward!
