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Can You Be Liable For The Previous Owner's Real Estate Taxes?

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What happens if you bought a house and then got a bill for real estate taxes that the last owner was supposed to pay? Do you have to pay, and what happens if you don't? Here's what you should know.

Are You Liable for Old Real Estate Taxes on Your Home?

You may wonder why you're getting a real estate tax bill for taxes that were due before you bought your home. Most real estate taxes are charged to the property, not the specific owner. Even though the current owner is supposed to pay, it's actually the property that gets the bill. As such, if there are unpaid real estate taxes on your home, you will likely need to pay them. This process is similar to real estate regulations if you bought a business; you get both its assets and its debts.

What Happens if You Don't Pay the Real Estate Taxes?

If you don't pay the real estate taxes, you could face additional costs plus a potential foreclosure. The usual process is a late fee for missing the initial deadline plus interest until paid. 

Foreclosure rules may vary. In some locations, the government moves to foreclose after a certain amount of time. In other locations, it's based on the total amount of real estate taxes that you owe. There may be exceptions if the property is your primary home.

How Can Someone Sell You a Home With Unpaid Real Estate Taxes?

In theory, someone shouldn't be able to sell you a home with unpaid real estate taxes. Unpaid taxes are a matter of public record. Before you close on a home, it's best practice to have an attorney or title insurance company check for unpaid real estate taxes or other title issues.

Normally, you'd see the unpaid taxes before you finalize the purchase. You'd put in the contract that some of the money from the sale has to go directly to pay off the tax debt so you're not buying a home with unpaid taxes.

Can You Sue the Prior Owner for the Unpaid Taxes?

Whether you can sue the prior owner for unpaid real estate taxes depends on what happened. If you knew or should have known about the unpaid taxes, you agreed to take on that debt by buying the home without making sure they were paid off. If the previous owner committed some sort of fraud or breached the contract, you may be able to sue them.

To learn more about how to handle real estate taxes from before you bought your home, contact a real estate tax attorney.