Church Buys Foreclosed Property, Ends Up With $170,000 Tax Bill

Members of a Dallas-area church congregation thought they had done their due diligence when they looked into buying some foreclosed property. They were told that all the back taxes had been cleared off the books; so why are they now facing a tax bill for $170,000?

The problem, the church has subsequently discovered, is that while the back taxes were erased when the land first went into foreclosure, the property went un-purchased for decades and the post-judgment taxes just piled up and up over all those years.

The church is planning build a community center to help with food giveaways for the needy. But they were stunned when their property tax bill came.

“We’re well over $170,000,” the reverend’s daughter tells CBS DFW, “for a piece of land we thought we would be paying an estimate of $25,000.”

The reverend says the church asked the city about any such taxes but the debt was never disclosed.

In order for those taxes to be deleted from the books, the church will need approval from the city and county governments, the school district, and the hospital.

One lawyer tells CBS that this is a risk people unwittingly take when they buy property directly from a taxing authority.

This is the kind of thing, the attorney explains, that would normally be caught by a title insurance company: “They would contact the taxing authorities and tell a potential buyer, ‘Hey, you’re buying this subject to twenty years’ worth of taxes.'”

The church accuses the city of misleading it and others into thinking they were getting a deal on property.

“Then the true sale is not what they’re out there making the bid for,” the reverend’s daughter says. “They clearly know that these taxes are owed and it’s a part of the sale. So it’s deceptive trade practices. You are selling a product that you that the citizen or the consumer has to be responsible for more and you’re not discussing that. And you’re saying to them, ‘You find out.'”

The attorney tells CBS that just because you’re paying cash for property doesn’t mean you can skimp on the investigation.

“You’re still buying real estate,” he says, “and you’d better do your homework or you could run into a real land mine.”

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  1. gman863 says:

    I’m wondering if title insurance would cover this, since it was an omission of a property lein?

    • Azagthoth says:

      Title insurance would have covered it, but they didn’t buy any.

      • QrazyQat says:

        Title insurance is cheap. Not getting it — especially for foreclosure/auction stuff, is really dumb. Anyone buying that kind of stuff now who doesn’t look into the background of the property they are trying to get cheap is being very foolish. And I’m usually not one to blame the customer. But right now there’s a lot of people out to get stuff cheap, and they need to be smart about it.

    • MaxMiami says:

      The back taxes would have been uncovered during the lien search prior to getting title insurance.

      So technically, title insurance would cover this if the lien search failed to uncover the back taxes, but more likely, the title insurance couldn’t even be bound until the tax liens (and other liens) were cleared first.

      • Draskuul says:

        Actually, back when I bought my house my title insurance company gave us the all-clear on back taxes. A year later I got a sheriff at my door serving me with a suit for back taxes. Fortunately I was able to just send the paperwork over to the title company and let them deal with it. Of course they didn’t take care of the last $75 or something worth of fees, so I had to go through the whole thing over again a year later. It’s been clear since, with no dime out of my pocket.

  2. homehome says:

    damn, does it say in the video why they didn’t use a title company or somebody?

  3. nsv says:

    If only taxes were public records and there was some way to search those…

  4. TheMansfieldMauler says:

    In order for those taxes to be deleted from the books, the church will need approval from the city and county governments, the school district, and the hospital.

    Yeah good luck with that.

  5. AdamBC says:

    Jeez. They should just do a chargeback on the purchase! Goods not as described.

  6. Liam Kinkaid says:

    Here’s an idea. How about you go and pray about it. If God wants the taxes to be erased, he’ll make it so. If the taxes aren’t relieved, God works in mysterious ways. Once you’ve prayed about it, though, I think petitioning the government or suing someone would just be trying to subvert the will of the Lord. And that sounds particularly naughty. So don’t do that.

    • Kaleey says:

      Ok, so let’s rewrite the article: A not-for-profit organization that wanted land for a new food center, bought the property, then found out that there were decades of post judgment taxes on it they didn’t know about. Or a private owner. Does that make it different?

      Please don’t mock them just because they are a church and part of some kind of organized religion.

      • Liam Kinkaid says:

        If they chose not to insure themselves against contingencies as any rational thinking entity would, they deserve to be mocked. Whether they are a church, another non-profit entity, a private individual, or a mega-corporation, if they do not perform due diligence and mitigate their risks, they should deal with the consequences.

        Of course, if they have the taxing authority’s written documentation that there were no owed taxes, they’re in the clear and had obviously done their homework. But if they don’t have written documentation, there’s no proof that the reverend’s conversation with the city regarding taxes ever even occurred.

        • Sneeje says:

          Of course they do, just not for their choices of faith. If this had been an african-american non-profit organization, would you call them stupid n—–s?

          • Liam Kinkaid says:

            If they lived next to me, I certainly would call them “stupid neighbors,” no matter what their color.

            They are the ones who threw their religion out there, trying to use it as a shield for their stupidity to have the tax debt forgiven. A private individual making the same mistake would probably not have garnered media attention. But the big bad government going after a poor little defenseless church? Let’s call the news stations and get everyone on our side!

            They’re trying to use their status to manipulate public opinion. Everyone else is free to use their status to mock them.

            • Sneeje says:

              Ok, then we’ll agree to disagree. They are not using their “faith” (which is what the commenter above mocked via “praying”) to get out of their foolish decision, but they are perhaps using their status as a non-profit organization to claim they should not have to pay.

              Setting aside their faith, I think there is a conversation to have here. Is it productive to:
              a) bankrupt an organization that is not profit-oriented and has no means to come up with the funds, or
              b) spend money litigating against an organization if they were not attempting to defraud the city, or
              c) taking money from an organization that has a positive impact on the community?

              Maybe they are a bunch of miscreants, who knows? What I do know is that being Christians doesn’t make them more worthy of scorn than any other group.

              Probably the best outcome would be to void the sale and have the govt take back the land.

              • RvLeshrac says:

                They always say “God will provide” when it comes to abortion debates. They always say “God will save you” when they’re anti-whatever-lifestyle. Let their god provide for them and save them.

                • Sneeje says:

                  Nice generalization, bigot. And republicans are greedy, democrats are tax-o-crats, atheists are immoral, and blondes are stupid, right?

                  • pgr says:

                    Well, you are partially correct. God will provide if you believe hard enough (smirk, smirk), all Republicans are lying, selfish, greedy self-centered low-lifes and I never meet a smart blond but Democrats are NOT tax-o-crats, they believe in helping humanity rather than destroying it for their own personal wealth and any atheist I ever met (and I’ve met an awful lot) was a lot more moral and inteligent than most so called “religious folk” who are perfectly wiling to believe any nonsense told by them by “A man of God”.

                    You either believe or you don’t and I DON’T! ;)

                    • Cerne says:

                      Hey asshole. People like you give atheism a bad name. It’s amazing that you can be such a hateful, prejudiced prick and still think you’re open minded.

                    • Chet Coenen says:

                      Hello, I work for the THHUG organization, thats the Troll Head Huntiners United Group. I see you have a great thread going here, would you be interested in joining and all of you above here?

                    • Coffee says:

                      Shut yer gob. You give people like me a bad name, and that’s not easy to do.

                    • Blueskylaw says:

                      Coffee – Official drink of the heathen Gods.

                    • Coffee says:

                      I came to worship the Golden Calf, stayed for the orgies.

                    • Sneeje says:

                      Whoosh! Clearly you completely missed the point of my post. I believe none of those things, including the line about atheists. I was simply pointing out other examples of bigotry in line with RvLeshrac and yours.

                      You see, you’re pretty much demonstrating textbook ignorance and a great example of hasty generalization. Try evaluating each person on their actions and behaviors rather than on your limited experience. I mean, you’ve met like what, 1 percent of 1 percent of 1 percent of all atheists or religious folk?

                      My own experience with atheists is that they are often smug, ignorant, and self-important like you, and it makes me embarrassed to call myself one. But it would be silly to generalize that perspective, wouldn’t it?

                  • frankrizzo:You're locked up in here with me. says:

                    You forgot about Irish being drunks.

                • crispyduck13 says:

                  Nice.

            • Jane_Gage says:

              And let’s be honest. They’ve been dodging taxes for years.

      • catastrophegirl chooses not to fly says:

        i wouldn’t mock them for being part of a religion, i’d mock them for over reliance in blind faith

    • partofme says:

      Briefly stopped by for anti-religion comments that have nothing to do with the article… was not disappointed, thanks to you.

    • crispyduck13 says:

      You’re going to get all kinds of haterade for what you did there, but keep in mind at least one sane person here does agree with you and found it humorous.

    • Cerne says:

      Ya this church definitely deserves your asshole comments. I mean building a centre to help the needy how fucking horrible.

    • 401k says:

      Tell people there’s an invisible man in the sky who created the universe, and the vast majority believe you. Tell them the paint is wet, and they have to touch it to be sure.

  7. McRib wants to know if you've been saved by the Holy Clown says:

    Wait, so who foreclosed? Did they buy this from the city?

  8. Costner says:

    Here is the deal – unless you have documentation from the city/county/property tax office indicating that they did in fact tell you there were no taxes due… then you still owe the taxes.

    Failure to properly research the tax situation is no excuse. Now I have no doubt that if they ask all parties involved that they will waive the taxes if for no other reason that they don’t want to be on the wrong end of a media blitz, but just because they are a church shouldn’t really give them any special treatment merely because they failed to consult the proper people (such as a Title company) and the failure to obtain everything in writing.

    • AtlantaCPA says:

      I really hope the city/county/school district do not back down on this one. Even when you’re buying a home from a friend who currently owns and occupies it you get title insurance. I didn’t even know that people ever didn’t get title insurance. Crazy stupid!

  9. econobiker says:

    “The reverend says the church asked the city about any such taxes but the debt was never disclosed.”

    I hope they got that in writing – just asking a lowly records clerk about if there are taxes owed doesn’t cut it.

  10. Loias supports harsher punishments against corporations says:

    “One lawyer tells CBS that this is a risk people unwittingly take when they buy property directly from a taxing authority. “

    I would think that if anybody knows readily and accurately what the taxes owed on a property are…. it would be the goddamn taxing authority itself.

    • frank64 says:

      Yeah, and very sleazy of that taxing authority not to disclose it.

    • McRib wants to know if you've been saved by the Holy Clown says:

      What I find odd is that if the taxing authority was in possession of it, then did they themselves not owe the taxes on it that accrued while they owned the damned thing?

      What am I missing here?

  11. Azagthoth says:

    wait a minute… are you telling me that a religious organization doesn’t want to pay taxes?!

    • HomerSimpson says:

      It’s Texas–they don’t believe in taxes there.

      Like the other poster said, why don’t they just “pray it away” ?

      • Agent Hooter Enjoys Enhanced Patdowns says:

        That’s working so well for them in their ‘pray away the gay’ camps after all.

  12. Hungry Dog says:

    “You’re still buying real estate,” he says, “and you’d better do your homework or you could run into a real land mine.”

    Hehehe.

  13. Alisha Gray says:

    I work for a title insurance company, and a big part of my job is checking to make sure there’s nothing like this on the properties we insure. If I were to miss it, my company would be liable for the undisclosed taxes (and I’d probably be out of a job…)

    so yeah. When you’re buying property, especially from a foreclosure, title insurance is a REALLY good idea.

  14. framitz says:

    Pay or forfeit the property, I don’t care as churches should not be in the non-profit class anyway.

  15. CrazyEyed says:

    I don’t even feel sorry for people anymore when I read articles like this. If you don’t get title insurance you are only asking for trouble. As much money as you spend on the purchase of a home, a couple hundred bucks is nothing to the many thousands you may end up paying later.

    • loggg says:

      Just how complicated should it be to make a purchase??

      That $25000 figure was wrong, and whose fault is that? Was it the church for not doing due diligence, or the seller for failing to fully disclose all costs?

      I find it disturbing that you can owe taxes on a property for periods of time before you actually owned that property. Does that concept work on cars too? If I buy a used car in a jurisdiction that taxes cars, and I later find out the previous owner didn’t pay those taxes, do I owe the taxes?

      Can’t the church simply undo the deal?

      • Azagthoth says:

        Real property and personal property are apples and oranges.

        Most areas have a set amount of time before the property goes to tax sale, around here it is 5 years. However if the city was the former owner the property wasn’t getting taxes paid, and they weren’t going to sell it at tax sale, so it sat for 20 years building up. Most city owned properties are also tax exempt though, so something doesn’t sound right here.

        All of that being said, if the sale had been insured this would all be on the title company.

  16. mannyvel says:

    As a non-profit, aren’t they exempt from property taxes? I’d think that exception would cover acquired property that had delinquent taxes.

    Does “exempt from property taxes” mean “exempt from paying any property taxes, even if those taxes accrued to a property that we just bought?”

    • Liam Kinkaid says:

      The way I interpret it is that they’re exempt from taxes accruing while they own the property. They purchased the land which already had taxes attached to it.

      To think of it another way, what would stop a church (or other non-profit entity) from purchasing a tax-burdened piece of property for face value then selling it to a parishioner to effectively wipe away the owed taxes?

      • mannyvel says:

        This case is happening today. Portland, OR bought part of a cemetery, and the county wants its property tax because the part that PDX bought wasn’t part of the cemetery anymore and therefore wasn’t exempt from taxes. Portland argues that since it’s not subject to property taxes it doesn’t have to pay.

        Can property taxes be laundered this way? I suppose they could – but it could also be that the future buyer is the one liable for the accrued taxes.

  17. Bodger says:

    [begin snark]
    That’s OK. Being a church they will never pay another cent of tax on the property no matter how many city resources they consume in the future. Maybe they should just look at the back taxes as ‘paying it forward’ and move on.
    [end snark]

  18. Sarek says:

    This happened to a not-for-profit I know of. Some land was donated. A few weeks later, the not-for-profit shows up on a list of delinquent taxpayers! So an attorney worked on their behalf and got the land classified as owned by a not-for-profit. (I don’t know the details.)

    What no one knew was that it didn’t erase the existing delinquent taxes! A year or 2 later, the land got auctioned off at foreclosure. There had been no subsequent warning to the not-for-profit. So poof! the land was no longer theirs/

  19. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    Thank you for posting this article. My stupid husband announced that his uncle told him he would give him a piece of property adjacent to our property, as the other uncle just died and still living uncle wants to be rid of the property. I told him to make sure there were no liens, back taxes, judgements, etc. and he said “but my uncle would never do that to me”.

    OK. **washes hands of situation and continues master plan to escape**

  20. DrPizza says:

    Hmmm… The actual price of the property includes the back taxes. Letting the church off the hook without paying what the property was worth cheats all the local taxpayers out of the taxes that would be raised in the future. In other words, the local taxpayers will continue to have to cough up more money in taxes, because now, that property will never have tax paid on it. $170,000 for 10 years worth of taxes on that property? Sounds like a huge amount of land.

    Perhaps the reason that no private person purchased the property is that the private people were smart enough to investigate & found the lien. Letting the church off the hook – practically giving away such valuable land – seems to be an endorsement of a specific religion – something strictly forbidden by the constitution.

    • callenjr says:

      High property taxes are how Texas gets away with not having an income tax.

    • Darury says:

      The question is how much of that $170,000 is actual taxes over 10 years versus fees, late charges, etc. My guess is that less that 30% of the debt is related to taxes while the remaining 70% or more is related to “late fees”. Everyone complains about high fees for credit cards and such with late fees but doesn’t seem to have an issue with the government being able to assess 100% or more in overages.

  21. motoracer1486 says:

    It’s all apart of gods plan – pay up.

  22. Duke_Newcombe-Making children and adults as fat as pigs says:

    “You’re still buying real estate,” he says, “and you’d better do your homework or you could run into a real land mine.”

    Completely seeing what he did, there.

  23. mcgyver210 says:

    It shouldn’t matter if it was a Church or Individual the Church made the mistake & should have to pay for it just like anyone else would in the same scenario.

    Fair is Fair Unfair is Unfair Church or no church.

    I recently paid for Title Insurance so I would be protected against this type of thing so IMO it would be unfair to let the church off because they didn’t pay like me.

  24. mrsj says:

    “They clearly know that these taxes are owed and it’s a part of the sale. So it’s deceptive trade practices.

    The folks who sold the property to them probably have no legal right to impose or collect tax (even it was the city – wrong department). Therefore they cannot add it to the price. Soooo ….. its your property, your tax.

  25. mopman64 says:

    Pray to God, I am sure he will help them out.

  26. Kisses4Katie says:

    This is ridiculous. They had to lie in order to sell it; NO one would purchase a property with that worth with that amount of taxes due on it. I think this is terrible, and the county really, really just needs to let this go. It sounds like the church is still going to make a difference in the community.

  27. sparc says:

    If the church has it in writing that the tax liability was zero at the time of purchase, then they should sue.

    If it wasn’t in writing and the church was just gambling, then they should cough up the money or let the property go.

  28. edububble says:

    It sure sounds like they did the investigation. They asked about other taxes and were told no. Sounds like fraud to me.

  29. InsomniacZombie says:

    It’d be the ONLY taxes the church would ever pay….

  30. kcvaliant says:

    How is that any different then telling people come to church to save your eternal sould, but when you come in you find out you have to pay the church money for the soulsaving each week. Ohh the benz the priest/pastor is driving and 5 houses the church owns? Don’t worry about that. Keep paying.

  31. kcvaliant says:

    How is that any different then telling people come to church to save your eternal sould, but when you come in you find out you have to pay the church money for the soulsaving each week. Ohh the benz the priest/pastor is driving and 5 houses the church owns? Don’t worry about that. Keep paying.

  32. CarlS says:

    Sounds to me as if the law is, shall we say, a little confused. Or maybe just downright crooked. Logically, if I buy something today, and I absolutely never ever owned or used it in any way, shape or form, before today, then anything that occurred with that property beforehand is not my responsibility. The purchase itself is the delineating mark of when responsibility is assumed by a buyer. If the government insists on attaching liability to said property, then the government is obligated to disclose said liability. Else the sale is null and void. Of course, the legal system will claim otherwise, but we already know that the legal system is anything but. Alternatively, we could turn this around and make the same rules apply tothe government. Thus, when gov takes property by forfeiture or any other means, the gov (individual agent-actors) should be hel to assume liability. Bet that would clar up a lot of confusion . . . .