Property Taxes owed from two years prior to my purchase

8 Replies

I purchased a property in December of 2014 and have just received a default tax bill from 2012. My current year taxes are paid. This default showed on the initial preliminary title report I received and I inquired about it along with two other issues that needed to be resolved prior to close. When I received a second report this default was not on it, and I assumed (apparently to my detriment) that it had been cleared up, as the other two issues were still there and the title co had crossed them out indicating they were being cleared up at closing, which they were. I have both copies of the preliminary title reports showing the difference and notations. Does anyone have experience with this issue? If so, any advice as to where to start getting this cleared up would be appreciated!!

Rachael Collins

    Hi Rachael

    I'm not an attorney but this sounds like an issue that is the responsibility of the title company/attorney that handled your closing in 2014. If they missed the delinquent taxes and issued you a policy for title insurance, it would be covered under that policy. 

    I would call them right away and get it cleared. 

    We know you got a title search, but we don't know if you got title insurance. Was this a straight up sale, or some sub2/QCD type transaction? Look at your HUD closing statement, you should see these past taxes subtracted from the seller's proceeds. perhaps they were withheld, and the title co. simply failed to forward them. Call the title co., after you look at your HUD.

    @Erion Shehaj

     @Wayne Brooks

    It was an standard sale (private $, not even conventional financing), and we did get title insurance. The sellers made the sale difficult (divorce) and at the end when I asked the title company about the sellers costs (they didn't show up on my HUD statement) they said that the seller info was private information and wouldn't provide it. That was a little odd to me, but I haven't purchased many houses, so I let it go. I will contact the title company first.

    Thank you both for your advice!!

    Rachael Collins

      Well, I assume your contract called for the sellers to deliver title with property taxes current.  Also, check your title policy/commitment in the section B exclusions.  Hopefully, the title co. collected them, just didn't pay them.

      If the title company made a mistake, don't expect them to jump in and admit it right away...they will shy away from any liability like most any other insurance company. 

      Not sure about your area, but here in Texas, the title company "insures" based on the taxes being paid, unless of course you took title subject to any prior taxes owed, which would not be smart, but they would then show up as an exception to coverage.

      Guy Gimenez

      @Wayne Brooks is right, title companies have been known to collect for items and then not pay them after closing. Its almost always unintentional and a result of to much volume and not enough worker bees, but it happens. 

      It could also be they made a mistake and you'll need to file a claim. If it transpired as you've explained the title company will research the issue, and unless their is an unscrupulous plot, which I highly doubt, they'll need to resolve the matter. 

      I have contacted the title company and they found that their records do show the taxes and they should have been paid. They are referring it to their legal dept and will contact me once it has been researched regarding filing a claim. Hopefully it is as @Christopher Telles says and they will resolve without any problems.

      Thank you all for your comments and support!

      Rachael Collins

        Are you saying that the local government may have made a mistake and erroneously billed you for taxes that were already paid? 

        That has never happened before. Shocking, I know. :-) 

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