After the tax sale, are you stuck with the remaining mortgage?

Question

Do you have to assume the mortgage after you pay the taxes at the tax sale?

Answer 1

If a property being sold for back taxes is covered by a mortgage lien, the mortgage holder is virtually certain to purchase the property at the tax sale in order to protect their security interest. (Lienholders are notified of pending tax sales as long as the lien was properly recorded against the deed.) If they don't, they lose their security interest in the property and whoever purchases it will receive the property clear of any liens.

Answer 2

Tax leins are imposed on properties in order to pay the property taxes. They are the highest possible lein. Although proceedures vary from state to state there are basiclly two. Here in Michigan, the state forecloses on the property. They notify all current lein holders (mortgage, mechanics, etc) that the state is taking possesion of the property. Those lein holders can then pay off the tax lein. If they fail to do so the state wipes the deed clean and sells the property to cover the property taxes. In other states they have tax lein certificates. These are offered to investors who purchase from the state. After a period of time these investors can then foreclose on the property and take possession. All lein holders would have to be notified as part of the foreclosure process. Typically a mortgage company would pay back the investor the taxes and interest to redeem the property and then foreclose themselves so they would have pocession of the property.

Things are a little different with a federal tax lein but from your question it doesn't sound like that's what you have. If you'll indicate what state (the property is located in) I'll give you more specific answer.