Mortgage Company Fights Tax Deed Sale
One of the most popular questions people ask me, “Do bank mortgages really get wiped out by a tax deed sale?” Yes! As long as the bank was properly notified.
Recently an Appeals Court ruled against a mortgage company that tried to fight a tax deed sale. This all started about a year ago when Wells Fargo (formerly Wachovia) received notice that one of their Indiana properties they had a mortgage on was going to the tax deed sale. Instead of SOUNDING THE ALARMS at the bank (or going to DEFCON 1!) they sat on the notice and didn’t do anything until it was too late. Indiana like most tax deed states notifies mortgage holders of pending tax sales, Florida gives the lender at least 20 days to respond. Apparently nearly a month’s notice is just not enough time for the these banks to take action.
I often watch properties with a mortgage go to tax deed sale and sure enough, the larger the bank the less likely they will redeem the property in time. I don’t know if it is because these corporations are so big that information crawls at a slow pace up the corporate ladder or they just get more mail than they can handle. By the time the notice is given to someone who would know better… it’s too late. In most cases these notices are sent Certified Mail, which should indicate to the person receiving the mail… THIS MIGHT BE IMPORTANT. All I can say is their loss is sometimes a tax deed investors’ gain.
Wells Fargo fought the sale in trial court and when they lost there they filed an appeal. Wachovia appealed on the basis that they believed the notice should have been sent to an executive officer or agent of the company instead of how the State Law governing tax deeds dictates. This October the Appeals court ruled against them. Wells Fargo lost the case and their mortgage.
Indiana law says — Each tax sale notice must be sent to the owner of record at the last known address of the owner and to “any person with a substantial interest of public record at the address for the person included in the public record that indicates the interest.”
You can read more about the ruling in the Court of Appeals’ opinion .
Originally posted to Blog on 12/6/2011