When a property is owned either through direct purchase or from a mortgage, the owner is required to pay tax on the property to the government. A defaulting in tax payment can be shocking as you would forfeit your house for that single action. This is where tax deed comes in. More on loan modification tips will give more details on this.
What a tax deed is
A tax deed is a legal right for the government to sell a property of a tax defaulter in a bid to pay the tax owed the government. The sales of such property are usually done through auction and at a very low price value. Many people get to buy cheap things through the process. But what if the house is under mortgage, what will apply?
Tax deed, the law, and mortgage
A tax deed supersedes a mortgage contract. So, in a situation the government takes over a property and sells same, the mortgage company loses completely. This is the case in the US and different state laws may have to apply according to the laws of that particular state. The mortgage companies or banks do protect their investments to avoid this situation.
Mortgage companies are proactive
Mortgage companies knowing the gravity of tax penalties, often take care of tax payment for them not to fall victim of the tax deed saga. In some county and states, the process tends to protect the lenders in some ways. For instance in Maryland, the lender or bank is called up during the deed sales to get a hold of their investment.
With experiences of this, mortgage companies are always proactive on this issue by paying the tax even before the deed sale come. Some also have a cover on this by being responsible for tax payment. The fact is the tax deed is superior to the mortgage contract. Let a loan modification lawyer be around to guide during this process.