Hi Chuck,
I am not sure which state your property is in, so the title insurance requirements may be different. I am a Florida Division Manager of a title company. In Florida, we get to deal with many violations. Our process is to do what is called a lien search, this discloses to the title company what violations are out there. We then address the violation with the seller and listing agent. Once resolved, we close. If we cant resolve, we make full disclosure to the buyer and if they are paying cash for a property they can sign a Hold Harmless that would then make them knowingly responsible. If there is a lender financing the buyer, they do not usually allow the violation to remain on the title policy. These are just a few steps we take to ensure this doesnt happen.
Now, obviously, it did happen to you. My personal opinion, as a title company manager, is that we would go after the seller for payment. However, to avoid additional issues, such as tax sales, we would pay for what we missed to clear the issue immediately and then seek reimbursement from the seller.
Again, it may be different in your state. Also, did you purchase title insurance? Do you have a copy of your title insurance policy or a title commitment from the closing? If they showed the violation on their as an exception, that could be their protection from being responsible.
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