Buying a foreclosed home can be complicated

November 2, 2010 2:12:15 AM PDT
There are thousands of tragic stories of families losing their homes to foreclosure and on the other side there are the families moving into those foreclosed homes who often end up with challenges of their own. Many of them are discovering problems related to property taxes because it can be a very complicated process.

This case shows just how complicated the transactions become and how consumers have to be very wary. The new owner of a foreclosed home was entitled to hundreds of dollars worth of tax refunds, however, no one believed him since that little fact got lost in all that paperwork.

A public home auction sign is what greeted Conrad Dandridge and his family the day they moved into their new home in Martinez.

"These signs were in the windows, the front yard, and this monster was on the garage," says Dandridge.

It was a grim reminder of the foreclosures that swept the tidy neighborhood last year. There were nine homes in all, including one particular house that Dandridge scooped it up at auction for $358,000 -- a fraction of the home's previous value of $585,000. However, once the deal was done, Dandridge face a complicated issue with the property taxes.

"It took us about three months to actually understand what the problem was," says Dandridge.

Here's what happened -- Dandridge moved in during the middle of a tax year. So he paid property taxes based on the last assessment -- that $585,000. However, since the home's value had dropped, he was entitled to a partial tax refund. So, Dandridge paid the higher tax and waited for the refund. He waited and waited and he never received it. So Dandridge did some digging and found out why

"That supplemental refund went entirely to the bank. The bank had our money," says Dandridge.

Here's why the bank did that. You may recall when county tax assessors took the initiative last year to lower property tax bills for thousands of California homeowners. That was because of a widespread decline in property values. In this case, Contra Costa County went ahead and refunded $1,850 to the owner of the home, and at the time, the owner was the bank -- Chase Bank.

"That's kind of where I hit the final brick wall," says Dandridge.

But Dandridge had paid the taxes for five months of that tax year, so he was entitled to a portion of that refund. He figured he should get around $800 back. So he asked Chase for the money and it said no.

"They didn't believe me, so they would call Contra Costa County, but they would call the wrong office and they didn't understand that there had been a refund issued. Then I called 7 On Your Side," says Dandridge.

So, we contacted Chase and the bank contacted the county assessor's office. After untangling the complicated foreclosure paperwork, the bank realized indeed it owed Dandridge a tax refund check.

"We got $775 back," says Dandridge.

Chase Bank said, "Within a month of notification from the Contra Costa County tax office, we reimbursed Mr. Dandridge the full amount he was entitled to."

"Whatever 7 On Your Side did, whoever they got to, they got someone's attention. I'm greatly appreciative," says Dandridge.

There was yet another twist to this story: Dandridge thought he'd purchased the house from Citibank. Actually, Citibank had already sold it to Chase. It took a lot of detective work to figure out who had title and where that tax refund went.

If you purchase a home in foreclosure, be ready for all the twists and turns.


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