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.”
Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.