Foreclosure and Delinquent Property Taxes - Will Lake County or tax certificate holder pursue me personally for taxes?

Asked almost 4 years ago - Hainesville, IL

I do not escrow taxes and was unable to pay property taxes in June/Sept for 2009. I understand there is a tax sale in November and that I have up to 2 or 2 1/2 years after that to pay tax plus interest or the house will be sold. I am over 90 days behind in mortgage payments and possible foreclosure. If house is foreclosed by lender can Lake County or certificate holder pursue me personally for taxes (like wage garnishment)? Also, if I do lose this house I might be able to cash in my 401k in a year or two and buy another smaller less expensive house in Lake County. Would the property tax from the previous house be attached to this new house as well?

Thank you in advance for your answer.

Attorney answers (2)

  1. Mara Ann Baltabols

    Contributor Level 13

    Answered . Many times the lender purchases your property at the foreclosure sale and they pay the delinquent taxes to get right of that priority lien on your property. That amount paid could be added to the overall amount that you owe for a deficiency aka the difference between what you owe on the mortgage and what the house sells for at foreclosure. Hopefully, you could work out a consent foreclosure or deed-in-lieu of foreclosure before the foreclosure sale and work out an agreement for no deficiency. Following foreclosure, you may have wait a few years for your credit to recover enough to purchase a home.

    The information in this answer is not intended as legal advice nor do I intend to create an attorney-client relationship with any reader simply by answering this question or contributing as a member of AVVO.

  2. Stephen Samuel Messutta

    Contributor Level 16

    Answered . 1. When a lender is planning on filing a foreclosure lawsuit, one of the first things it does is figure out what title to the property looks like, and orders "minutes of foreclosure" which is like a title commitment or abstract of title. If the property has gone to tax sale, it will show "taxes sold", and if the taxes have not been sold, it will show "unpaid taxes." One way or the other the lender will be alerted. Most lenders who are not sure how long the process may take, will handle the taxes and add them to the indebtedness since it will be added to the deficiency the borrower is liable for but they are protected to be able to sell the property at a sheriff's sale.

    2. The county has too many other "easy out" options to worry about you. Someone else will pay for the taxes, and the holder of a tax sale certificate will sooner attempt to have a tax deed issued than sue you -- you're less likely to be collectible, whereas the property is always worth something, and hopefully more than the taxes.....

    3. Property taxes attach to the property taxed. If a lender gets a deficiency judgment against you, however, and learns that you've purchased a home, it can attempt to levy on the new place. However, even before you buy a home, at least in the same county, you'll probably need a loan, and the lender will want its own title insurance. If the lender that got the deficiency judgment against you records a general judgment lien (usually they do) the title company in the new purchase will pick it up and likely kill your sale unless you can pay the loan off, and not only might you screw up your purchase, but you could lose your earnest money if the purchase contract doesn't let you out because of that kind of title problem.....

    You may want to consult with an attorney now to avoid the fallout that could happen. Like for a short sale, or mortgage modification (there are federal programs), or a deed in lieu of foreclosure -- all of which can either cap or eliminate the potential for a future defiiency.....

    The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is currently licensed to practice law actively only in the State of Illinois, inactively in Florida. Responses are based solely on Illinois law unless stated otherwise.

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