State demands siblings pay late parents' nearly $20,000 property tax debt

The Wills family from left to right: Chuck Wills, Ella Wills (dec.), Karen (Wills) Younce and Jim Wills

The state of Oregon told a veteran, his brother and sister to pay a nearly $20,000 property tax debt they said they didn't owe.

The debt was racked up by their deceased parents on a house the three siblings claim they never owned.

"It's horrible," said Jim Wills, one of the siblings. "You don't really know where to turn when a government entity comes after you."

KATU's On Your Side Investigators helped the family get answers, and results.

'It made no sense'

The parents of Jim and Chuck Wills took out a reverse mortgage on their Gresham home about 10 years ago.

They knew it would allow them to stay in the house on Southeast 12th Street until they passed away, and they didn't want their children to be saddled with their debt.

"At that time, there was also an option when you had a reverse mortgage, you could defer your property taxes 'cause that would be paid when the house was sold," Chuck Wills told KATU.

That tax deferral program allowed their parents to essentially take out a loan from the state. Once they died, the Wills children took action, hoping to free themselves of the decaying home and their parents' debt.

"We immediately signed papers over to Wells Fargo giving our rights up for the house," Chuck Wills said. "None of the three of us ever had our name on the title or anything on the house itself."

Wells Fargo told KATU News it immediately started paying property taxes on the home. A spokesman claims at the time, the bank didn't know about the deferred tax debt, "Because county records simply showed the taxes as paid without any way for us to determine they were being paid by the state during that time."

As the loan's interest grew, Chuck and his siblings said they were kept in the dark.

"Right now it's kind of a mess... we don't know what's going on," Chuck said in November.

Another Wells Fargo spokesman told KATU there were legal holdups as well, saying, "We began the foreclosure process in 2013 but the court has not allowed us to proceed due to the status of the estate."

Chuck said Wells Fargo kept them updated about the house not being sold, but for two years, didn't tell them about the legal problems.

In August, he and his siblings received the first of what they call an alarming series of letters from the state.

"What it was saying was telling us that we owed $19,600-and some in back taxes for tax deferral on the property tax," Chuck explained. "We never took possession of it but the state of Oregon is coming after us now for the back property taxes."

Jim, who is a disabled Vietnam War veteran, says the letters were especially painful.

"I get a letter from the Oregon taxation division saying, 'We're gonna lien your property, we're going to garnish your wages.' I mean, my disability income, my Social Security - they're gonna go after that? I mean, it's pretty alarming," Jim said. "I've never had any legal authority come after me for something that I really didn't feel and can't understand that I owed."

The letters mentioned an appeals process, but for about a month, Chuck says they had a tough time getting answers from the state.

"Finally, the third contact got a hold of me about three to four weeks ago. Kind of funny, not like the first two, who just said, 'This is what the law says, we're gonna do it.' He agreed with me that it made no sense," Chuck said.

Chuck contacted state Rep. Mark Johnson, R-Hood River, who said he helped convince the Department of Revenue to put the case on hold. After KATU News reached out to the agency, it sent Jim, Chuck and their sister a letter, saying in part: "After reviewing additional information submitted to us, we've determined you are not currently responsible for this debt."

Oregon Department of Revenue Spokesman Bob Estabrook said he cannot legally comment on the case directly, but said the state started collecting on tax deferral loans in a different way this year to enforce a law passed in 2013.

"The issue that was developing was a situation where somebody inherits their parents' house and if they don't try to sell the house, then there's no mechanism to re-pay the taxes," he explained.

Estabrook admits going after people like the Wills siblings, who say they never owned their parents' home in the first place, may not make sense.

"Those are the kinds of complexities that we have run into and because of that, we have put the brakes on our additional collections in this area because we want to make sure that we're making good use of the state's money in terms of where we try to collect, where we put our effort," Estabrook said.

KATU News reached out to Wells Fargo repeatedly for this story.

Tom Goyda, a bank spokesman, sent us the following email:

"First, to be clear, Wells Fargo does not own the home.

Because probate was never opened and no personal representative or executor was designated to represent the estate, no one has had the legal standing to convey title to the property and we have been limited in what we can discuss with the family in this case. The status of the estate and other legal issues also have caused delays in the foreclosure, but we hope to be able to move toward completing the foreclosure as soon as possible.

To clarify the tax situation, the reverse mortgage proceeds were used in part to pay deferred taxes that were outstanding as of April 2006 when that loan was originated. Wells Fargo has been paying the taxes on the property since 2013, but the state indicates that there were additional deferred taxes incurred from 2007-2012. However, we were unaware of those until recently because county tax records simply showed the taxes as paid without any way for us to determine that they were being paid by the state during that time. Regardless, in an expression of good faith and because we think we will be able to finalize a foreclosure, Wells Fargo is taking steps to ensure that the remaining deferred taxes are paid."

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