Possible Tax Certificate Fraud?

Possible Tax Certificate Fraud?

Okay guys, hold your breaths on this one cuz its long and involved.

Let me start from the beginning: My wife & I have been living in a rented house here in Phoenix for almost 2 years with our friends. When we originally moved into this house, the owner (part of an investment firm that will remain unnamed) informed us that he had intended to rent this house with the intent to turn it into a half-way home after we left. At the time, we had only planned to stay a year but economic constraints had forced us to renew the lease. After that lease had ran out, we were almost ready to buy when we had talked him into a month-to-month due to a few things in our inability to achieve a decent loan.

Fast-forward to yesterday: My wife gets a call from a loan modification officer informing her that they would be foreclosing on the house but had the option to restructure the loan. However, this person had been assuming my wife was the landlord. He went on to inform her that they were the bank that was responsible for the loan on the house the landlord (only a small person in a much larger investment firm) & to expect a letter regarding the matter at the first of next month. The bank also said not to give him the keys because they would pay 4k for them. He was also surprised that our landlord had not informed us of the matter.

This information took us by surprise to say the least. Detecting a scam, I decided to do a parcel look up on my property. To my surprise, property taxes had not been paid on the lot for nearly 3 years and amounted in the thousands!

"What kind of investment firm lets a property default on it property taxes?" I wondered. I will not disclose the research Ive done getting to the rest of the story for obvious reasons, but a long story short; further investigation revealed that a tax lien had been sold on our property...8 months ago!

So does this mean that we have been paying the original investment firm for a property they technically did not even have ownership of? Not only that, the reason for the sale has something to do with Chapter 18 Taxation laws. The wording in the actual laws was too thick for my blood but we have reported this to the state & they concur that something smells bad about this whole situation.

We are really inexperienced at this kind of ordeal and would really appreciate any insight as to the possible outcome of such a matter & what course of action we should take to reclaim our money in the event of fraud. I know we have some really smart cookies on this site & your knowledge will not go unrewarded.

-=ThE DeaD RaVeR=-


"What!? NO! We can't stop here! This is bat country!"

Dead Raver,

Wow, sounds like you have quite the legal predicament!

Im no pro, but my first move and concern would be to gather up all contracts involved with renting the home. Any paperwork given to you by the "landlord" and all proof of payment for rent. Just to cover your assests sotospeak.

Since the home you are now living in has become a foreclosure and the bank already said they were willing to restructure the loan... maybe im way off on this one, if so please correct me, but maybe... just maybe, you could make an offer with the bank.

Obviously they know you were very unaware of this alleged scam with your "landlord". You could possibly make a deal out of this and own the home at a very good price. Keep if for yourself and/or rent it out or find another buyer and profit big!

Im not sure but its just food for thought. Make the best out of a bad situation and youre sure to come out on top.

Best of luck to you, your wife and your roomates. I hope to hear a happy ending to this story.


Tracy Lynn

My daily journal link.
I'd love to hear from you. Smiling


Tax Certificate situation

Dead Raver, Tracy has some good advice, gather up your paperwork and look for an attorney to help you sort everything out. If you are considering purchasing the house, be sure to have title work done to protect your interest. If you aren't interested in staying in the property, take the $4k and leave. Be sure you know who you are dealing with in making any contract, if the lender is going to foreclose, it may be best to let that happen because that will resolve any other liens or claims on the property.


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Tax Certificate situation

Hi Raver,

Depending on the amount of taxes and the discount you can get from the bank, you could also opt to buy the property. You will of course have to negotiate with the bank to include the taxes in the loan amount. If the taxes are not paid guess what?

The bank can also lose the property and the tax lien holder can ask for an auction of the property which is then sold to highest bidder. First come federal taxes, then state taxes, then city taxes. Everbody elses liens including banks can be wiped out. (That is most probably the reason for the $4k offer.)

You have a negotiable situation. Get some additional information through a real estate attorney.

Good luck.



The greatest force on Earth, compounding interest. - Albert Einstein

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