House problems

[KaiineTN]

My sister bought a new house a while back and apparently the contractor that built the house declared bankruptcy and left a lot of things unpaid for. Now the builders are coming after my sister, saying she's responsible for it. Is she?

There is also a matter of some taxes unpaid for from before she bought the house, that somehow they say she's responsible for paying it since she bought the house... How can you be responsible for someone else's taxes? zzz

What can she do, if anything? She's asking me for a $5000 loan to help her get through financial troubles until she can sell the house.

Basically, she was stupid to buy this house in the first place. If not for interest-only loans, there's no way in hell she could have afforded it before she was aware of all this crap that came with it.

Anyways, if any of you are familiar with this sort of thing, let me know. Are people trying to rip off my sister and manipulate things to make it seem that she's responsible when she isn't? Or is she just plain screwed?

[Lyion]

If she has a loan for the house, then she should direct the debtors to the bank, whom has the note. Have her call her mortgage company.

[KaiineTN]

I talked to her again.. So I guess when she first got the house, the mortgage payments were 1700 a month, which she could afford. Then, after the mortgage company found out about the property back taxes (from long before she owned the house), they raised her payments to 2200 a month. Aren't they responsible for those taxes, not her? What can she do about that?

I don't think the debtors are a problem, she said she hasn't paid them anything.

She's losing a fuckload of money on this, I feel bad for her.

[The Kizzy]

I'm not sure what state you are in, or your sister for that matter, but what it sounds like is not back taxes. I'll try to explain it. You own a house on an acre, and lets say taxes in that area are 2% of the value of the home. The home and land is appraised the the county or city appraisers office for $200,000. Meaning that your yearly taxes are going to be $4000 which is roughly $330 a month. Correct?

Now, lets go to a vacant peice of land. The builder owns that land and pays 2% of taxes on the value of the land appraised at lets say $20,000. That makes the taxes $400 a year, or roughly $33 a month. Thats how much the taxes on record are when the house is built, so for the first few months to a year (depending on what month she moved in and what month the taxes are payable) after the house is built and bought by your sister, she is paying a mortgage payment of $1733. $1700 of that is going to principal, interest, and what other escrow payments she has like home owners insurance or PMI, and $33 of it is being put aside for when the tax bill comes due. New year, new appraisal and BAM those taxes go up to the $4000 a year we previously discussed. So the mortgage company SHOULD have been collecting $333 a month for taxes and they were only collecting $33. So they will pay the taxes for her, BUT they will increase the $33 a month taxes to $333 so that next year they have the money socked aside in an escrow account to pay the whole tax bill, AND they will also increase it another $300 for a total of $633 to make back what they already paid for her.

SO now instead of her bill being $1733, its $2333 a month, and will be for the next year. Once she gets those back taxes paid down, the new payment will be $2033. Her other option is to send in one big check for what they paid for her and her bill will only go to $2033 instead of all the way up to $2333.

Hope this helps and at least makes sense.

[10sun]

Title insurance?

[lareau]

I'd go see a lawyer.

[kaharthemad]

i would find the contractor and remove his flesh with a blowtorch and a scalpel.

[Gypsiyee]

This might be a stupid question as Im not completely understanding of your situation, but does she realize that taxes and things associated with new construction are TREMENDOUSLY higher than that of a house that's already standing? it isn't like buying a new home is just oh I have to pay the higher cost at closing and then it's going to be the same in every other aspect - new construction has all sorts of other fees tacked to it, included inflated taxes, subdivision fees, the cost of improving the lot, etc. The taxes and stuff on the lot as flat land is usually relatively cheap; the minute you want to improve the lot and make it livable it's going to be a lot more

[DangerPaul]

Title insurance?

Also, if the subcontractors didn't file liens between 90 days and 1 year of completing their work, they are S.O.L.

[The Kizzy]

No offense to you here, Kainne, but it sounds like to me that your sister decided that she could afford the house when she bought it and is now regretting it, and making up some kind of story to get financial help out of someone who told her it was a bad idea in teh beginning.

Title Insurance is something that is MANDATORY on EVERY home buying transaction and basically holds the new owner NOT responsible for any kind of lein on the house that resulted in work, or whatever before thepurchase of the home. Its INSURANCE

As far as the back taxes, it is IMPOSSIBLE with the way mortgage companies work and the way counties/cities file hown title transfers to close on a home without getting caught up on all taxes, which is why I think what I explained earlier to be more of the case.