Property Tax Not Paid from Prev. Owner and my Home in Foreclosure

27 Replies

Hello everybody,

I have purchased a single family home in October 2020, with a cash offer.
In January 2021, I asked my property manager to pay my property tax of about 2,000$, she accepted and has paid with a check on 26 january 2021. The amount of 2,000$ it included a delinquent tax of about 1,000$.
Some weeks ago the tax was unpaid and for this reason I contacted my property manager to ask her the reason for this payment not accepted. She thought there was a problem with the County closed to Covid for months and running behind on all functions including processing these tax payments.


I have sent an email to the County Treasury Office and they told me that the Treasury returned the Check to my property manager February 18 and Parcel in Foreclosure. Moreover, they told me to contact them for payoff to dismiss foreclosure and that the payment must be in certified funds, cashier's check, or money order. Following payment in full the Prosecutor prepares the motion to dismiss and gives an Order to the Judge to sign and the foreclosure will not be deleted, only dismissed.


The day after, my property manager called the County Treasury Office and she told me that my home was in Foreclosure from the previous owner and this should have been cleared when the title transferred, but it was not. They required a Cashiers Check for payment. After a few days, my property manager has paid about 3,000$ with a Cashiers Check, so I have paid more than 2,000$ of delinquent taxes...Fortunately the County has accepted this payment and now the amount due is zero.


The Title Agent told me that the attorney for the prior owner was in the process of communicating with the Prosecutors Office in order to get the Foreclosure vacated, but the attorney that handled the foreclosure reached out to the county prosecutor's office and they are out of the office until next week. Moreover he believed I was mischarged from the county. Looking at the attached tax bill I should have only paid $2,000. He spoke to the prosecutor’s office and they advised that there is a new role where if a property is in foreclosure the owner has to pay the full year tax amount which was $2,000 for my property. He suggested I take this up with the county treasurer’s office because they made you pay $3,000…

Now my situation is in the hands of the Courts when a judge will dismiss the Foreclosure. The agent of the Title Agent and the County says I will not lose my home; I hope so.

I'm very worried about this horrible situation and I hope someone can help me to answer to my questions:

1) Should the title insurance protect me from Foreclosure and refund me from the delinquent taxes?
2) When will the Judge sign to dismiss the Foreclosure?
3) What does it mean " The foreclosure will not be deleted, only dismissed"? Will the Foreclosure problem be resolved permanently?

4) I could have another Foreclosure's problem if the previous owner has not paid mortgages or other?

5) Do I need to hire a lawyer?

Thanks for your help

@Edmond Dantes   Reach out to a real estate attorney.  The title insurance should cover this, that's the whole point of it.  

Below some answers to your questions

3) I am assuming that they can't delete a foreclosure record on the property, it will show as dismissed but the record will stay with the parcel.

4) The title insurance and your ALTA statement should say that the previous mortgage was paid, if it doesn't then the title insurance did not do their job.

Again, reach out to an attorney asap. 


I'm not an attorney and this is just my opinion.  

1.  Assuming your title policy doesn't have an exception for the passed due property taxes and that you did not agree to take title subject to them, the title insurer, not the title agent, may have liability for the taxes which accrued prior to your taking title.  There is an exception in the policy for payments made by the Insured without the prior written agreement of the Company but I don't the Company has been prejudiced by your payment.  I suggest you submit a claim the the insurer as soon as possible.

2.  I can't respond without knowing where the property is located.

3.  Matters in the public record generally cannot be deleted so they can no longer be found, they can only be dismissed so it can be found and reviewed.

4.  Yes, you could have a problem if there is a prior recorded unpaid mtg but then that's always the case.

5.  I believe it's always a good idea to talk with a good real estate attorney if your unsure of what's going on.

Originally posted by @Miguel Castillo :

@Edmond Dantes  Reach out to a real estate attorney.  The title insurance should cover this, that's the whole point of it.  

Below some answers to your questions

3) I am assuming that they can't delete a foreclosure record on the property, it will show as dismissed but the record will stay with the parcel.

4) The title insurance and your ALTA statement should say that the previous mortgage was paid, if it doesn't then the title insurance did not do their job.

Again, reach out to an attorney asap. 

Mr Castillo,

3) What does it entail? When the Judge will dismiss the Foreclosure, will this situation be resolved or not?

4) In the HUD, I don't see any mortgage but only $1,721 County taxes on the row 511.

Regarding the real estate attorney, have you an idea of his/her cost? 


Let me know plaese and thank you very much for your help.
Have a nice evening

 

Originally posted by @Peter Walther :

I'm not an attorney and this is just my opinion.  

1.  Assuming your title policy doesn't have an exception for the passed due property taxes and that you did not agree to take title subject to them, the title insurer, not the title agent, may have liability for the taxes which accrued prior to your taking title.  There is an exception in the policy for payments made by the Insured without the prior written agreement of the Company but I don't the Company has been prejudiced by your payment.  I suggest you submit a claim the the insurer as soon as possible.

2.  I can't respond without knowing where the property is located.

3.  Matters in the public record generally cannot be deleted so they can no longer be found, they can only be dismissed so it can be found and reviewed.

4.  Yes, you could have a problem if there is a prior recorded unpaid mtg but then that's always the case.

5.  I believe it's always a good idea to talk with a good real estate attorney if your unsure of what's going on.

Hi Mr Walther,

1) I have sent some email messages to the agent of the Title Company, but I don't know if he has submitted a claim. I will contact him to ask this.

2) In Ohio

3) ok, my goal is don't lose my home and do not pay other delinquent taxes.

4) How I can to know if the previous owner has unpaid mtg? If so, the title insurance should protect me from these payments. Is this correct?

5) have you an idea of his/her cost?

Thank you very much for your help

Have a nice evening

Good evening Edmond,

1. If the agent submitted a claim you should have received an acknowledgment letter from the insurer.  Assuming you haven't received one, check with the agent for contact information for the insurer or look at the Conditions section of your policy and submit a claim.

2.  I just checked on line and it appears tax sales are conducted by the Sherriff so all that should happen is the sale will be canceled.  there shouldn't be a dismissal by a judge but I recommend you confirm this with a competent OH real estate attorney.

3.  My response stands.

4.  You can't be certain, all that can be done is a search of the public records.  As long as your title policy doesn't have an exception for prior mortgages a missed mtg should be covered.  It's a rare occurrence so as long as you haven't received a foreclosure notice involving one I wouldn't worry too much about it.

5.  I don't know, but if it eases your concern . . .

Originally posted by @Peter Walther :

Good evening Edmond,

1. If the agent submitted a claim you should have received an acknowledgment letter from the insurer.  Assuming you haven't received one, check with the agent for contact information for the insurer or look at the Conditions section of your policy and submit a claim.

2.  I just checked on line and it appears tax sales are conducted by the Sherriff so all that should happen is the sale will be canceled.  there shouldn't be a dismissal by a judge but I recommend you confirm this with a competent OH real estate attorney.

3.  My response stands.

4.  You can't be certain, all that can be done is a search of the public records.  As long as your title policy doesn't have an exception for prior mortgages a missed mtg should be covered.  It's a rare occurrence so as long as you haven't received a foreclosure notice involving one I wouldn't worry too much about it.

5.  I don't know, but if it eases your concern . . .

Peter,

1) No, I have not received the acknowledgment letter from the insurer. I will follow your advice.

2) If the sale will be canceled, could I will buy the same home for the same price?

3) OK

4) I don't know if my title insurance has an exception for prior mortgages, I will ask to Agent of the tile company. I don't know if I have received a foreclosure notice involving because I have purchased the home with an LLC. I have contacted my CPA but her does not know if I have received any notice regarding my LLC.

5) oK

Thank you very much :)

 

On lines 211/511, the buyer was credited $1293 and the seller charged the same amount for unpaid 2020 RE taxes. There should be a $1721.35 charge to the buyer for the full year on page 2 of the HUD. If not, title screwed up.

Sounds like the clerk rejected the payment for 2021 taxes because 2020 remained unpaid.

In 20+ years I've never submitted a title claim on behalf of an insured. The insured buyer needs to follow the instructions for making a claim which are found in the Notices section of the policy. This includes submitting supporting paperwork. Don't depend on a third party to do this.

@Edmond Dantes ... @Peter Walther is referring to the foreclosure sale (presumably for those unpaid 2020 taxes) being canceled. You already own this property.

Originally posted by @Tom Gimer :

On lines 211/511, the buyer was credited $1293 and the seller charged the same amount for unpaid 2020 RE taxes. There should be a $1721.35 charge to the buyer for the full year on page 2 of the HUD. If not, title screwed up.

Sounds like the clerk rejected the payment for 2021 taxes because 2020 remained unpaid.

In 20+ years I've never submitted a title claim on behalf of an insured. The insured buyer needs to follow the instructions for making a claim which are found in the Notices section of the policy. This includes submitting supporting paperwork. Don't depend on a third party to do this.

@Edmond Dantes ... @Peter Walther is referring to the foreclosure sale (presumably for those unpaid 2020 taxes) being canceled. You already own this property.

Hi Mr Gimer,

1) I have attached the part 2 of the HUD.

2) My property manager has paid 2,000$ (about 1,000$ for delinquent tax) with a check 26 January 2021. The County Treasury told me that the Treasury returned the Check to my property manager February 18 and Parcel in Foreclosure.

They required a Cashiers Check for payment. My property manager has paid about 3,000$ with a Cashiers Check 26 March, so I have paid more than 2,000$ of delinquent taxes...

The County has accepted this payment and now the amount due is zero.

Thanks for your help

 

@Edmond Dantes As I suspected, the title company messed up and failed to collect and pay the 2020 taxes that were overdue at the time of your settlement.

The title company should reimburse you for any interest and penalties you incurred as a result of their error -- plus perhaps some extra for having to deal with this.

Regarding the 2020 taxes themselves... in my opinion, you will ultimately be responsible for them, even if a title claim is filed. You were paid $1293 by the seller for their pro rata portion of that bill, and the balance of the year was therefore yours to pay. That's what fairness requires.

Originally posted by @Tom Gimer :

@Edmond Dantes As I suspected, the title company messed up and failed to collect and pay the 2020 taxes that were overdue at the time of your settlement.

The title company should reimburse you for any interest and penalties you incurred as a result of their error -- plus perhaps some extra for having to deal with this.

Regarding the 2020 taxes themselves... in my opinion, you will ultimately be responsible for them, even if a title claim is filed. You were paid $1293 by the seller for their pro rata portion of that bill, and the balance of the year was therefore yours to pay. That's what fairness requires.

Mr Grimer,
1) I'm not expert, I don't understand the problem on the lines 211/511.
a) Row 211, 1,293.37$ (2020 County taxes) is a my credit?
b) Row 511, 1,721.36$ is the debt of the seller?
c) Rows 211 and 511, should have the same amount?

2) In this moment my first problem is to avoid to lose my home. I have paid all the property taxes an now the amount due is zero, but I don't know if the seller has other debts (mortgages, etc). If yes, this could be an other problem?

3a)Is there the possibility that the Judge will not sign the dismiss of the Foreclosure, after I have paid all the property tax?
3b) Have you an idea when the Judge will sign the dismiss of the Foreclosure?

4) Do you too think I need to hire a real estate attorney or it would be enough to send only a claim to the title company?

Mr Grimer your help is very valuable, thank you very much.
If I should buy a second property in Ohio, could I conctact you for to buy your title policy?

Reading over the thread it is not mentioned what state are you in and when were the 2020 property taxes due?  Based on the settlement statement you received a credit and therefore where responsible for paying the property taxes in full when they were due

In Texas, this is how it would be handled as 2020 tax bills would not be out yet in most counties and would not be due until Jan 31st 2021.  Obviously this is different in other states

Foreclosing right after the property taxes were due just does not make sense as it can take many years before most jurisdictions being foreclosure

Could the delinquent taxes be from a previous year and not have been picked up by the tax certification ?  Even this is questionable since money in should be credited toward the past due balance first

@Edmond Dantes There is only an adjustment between buyer and seller on the settlement statement. So while the 2020 taxes were adjusted between buyer and seller (as if the buyer was paying them), there was no charge to the buyer and no payment made to the state/county for the unpaid taxes. Title company error.

Your images do not show the line 511 dollar figure, but it really doesn't matter now as there was no payment made to the state/county. You'll need to crunch the numbers again factoring in penalties and interest, etc.

If the 2020 taxes are now paid there is no lien to foreclose so you should be clear. I assume you'll post an update when this is all ironed out. Good luck.

Originally posted by @Greg H. :

Reading over the thread it is not mentioned what state are you in and when were the 2020 property taxes due?  Based on the settlement statement you received a credit and therefore where responsible for paying the property taxes in full when they were due

In Texas, this is how it would be handled as 2020 tax bills would not be out yet in most counties and would not be due until Jan 31st 2021.  Obviously this is different in other states

Foreclosing right after the property taxes were due just does not make sense as it can take many years before most jurisdictions being foreclosure

Could the delinquent taxes be from a previous year and not have been picked up by the tax certification ?  Even this is questionable since money in should be credited toward the past due balance first

Docs show Ohio.

Tax sales happen pretty quick east of the Mississippi. In this case we're dealing with an October settlement with taxes already having been overdue in or around July.... and yet still unpaid in March of the following year.

Originally posted by @Tom Gimer :

@Edmond Dantes There is only an adjustment between buyer and seller on the settlement statement. So while the 2020 taxes were adjusted between buyer and seller (as if the buyer was paying them), there was no charge to the buyer and no payment made to the state/county for the unpaid taxes. Title company error.

Your images do not show the line 511 dollar figure, but it really doesn't matter now as there was no payment made to the state/county. You'll need to crunch the numbers again factoring in penalties and interest, etc.

If the 2020 taxes are now paid there is no lien to foreclose so you should be clear. I assume you'll post an update when this is all ironed out. Good luck.

Mr Grimer, 

What do you think about these images attached?

 

Originally posted by @Tom Gimer :

@Edmond Dantes There is only an adjustment between buyer and seller on the settlement statement. So while the 2020 taxes were adjusted between buyer and seller (as if the buyer was paying them), there was no charge to the buyer and no payment made to the state/county for the unpaid taxes. Title company error.

Your images do not show the line 511 dollar figure, but it really doesn't matter now as there was no payment made to the state/county. You'll need to crunch the numbers again factoring in penalties and interest, etc.

If the 2020 taxes are now paid there is no lien to foreclose so you should be clear. I assume you'll post an update when this is all ironed out. Good luck.

Regarding line511, I repost the image of the HUD, 1°PART

 

Originally posted by @Tom Gimer :

@Edmond Dantes There is only an adjustment between buyer and seller on the settlement statement. So while the 2020 taxes were adjusted between buyer and seller (as if the buyer was paying them), there was no charge to the buyer and no payment made to the state/county for the unpaid taxes. Title company error.

Your images do not show the line 511 dollar figure, but it really doesn't matter now as there was no payment made to the state/county. You'll need to crunch the numbers again factoring in penalties and interest, etc.

If the 2020 taxes are now paid there is no lien to foreclose so you should be clear. I assume you'll post an update when this is all ironed out. Good luck.

the delinquent begins from 2014

 

@Edmond Dantes Definitely file a title claim. My answer above concerned only the 2020 taxes. 

Since you were given a buyer-side only HUD we don't know what was charged to the seller, but apparently it was short. It does appear that you have since been forced to pay some prior years taxes, interest and penalties in order to protect your interests.

Making the claim will immediately force the insurer, agent and seller to figure out who owes what.

@Edmond Dantes

I feel like the property manager may have a measure of liability as well. If the county returned the check to him/her, why were they not aware of it and inform you? The other fishy detail here is that on your HUD it has county taxes as paid.

Definitely title insurance should cover you otherwise with the previous owners taxes and previous mortgage. As far as attorney fees, if not your fault, maybe you can be reimbursed by the parties at fault.

And yes dismissed means problem over.

Originally posted by @Tom Gimer :

@Edmond Dantes Definitely file a title claim. My answer above concerned only the 2020 taxes. 

Since you were given a buyer-side only HUD we don't know what was charged to the seller, but apparently it was short. It does appear that you have since been forced to pay some prior years taxes, interest and penalties in order to protect your interests.

Making the claim will immediately force the insurer, agent and seller to figure out who owes what.

thank you very much for all your answers. 

Have a nice weekend :)

 

Originally posted by @Jennifer Marie Shanks :

@Edmond Dantes

I feel like the property manager may have a measure of liability as well. If the county returned the check to him/her, why were they not aware of it and inform you? The other fishy detail here is that on your HUD it has county taxes as paid.

Definitely title insurance should cover you otherwise with the previous owners taxes and previous mortgage. As far as attorney fees, if not your fault, maybe you can be reimbursed by the parties at fault.

And yes dismissed means problem over.

I agree, my property manager should have noticed it. Fortunately, I checked her payment but the tax was unpaid.

I hope that the title insurance covers me from taxes and mortgages not paid by the previous owner. After reading all your answers, it would appear that way.

The agent of the title company insurance told me: "We can do anything in this moment, we can only to wait the signature of the Judge". I don't know if he has opened a compliant procedure, but having receiving nothing, I suppose he did not. I'll have to ask for it on monday.

I would want buy a second property but I think it would be better to wait the signature of the Judge to dismiss the Foreclosure.

Hower, every month I wait is money lost.

Thank you very much for your answer :)

Originally posted by @Tom Gimer :

@Edmond Dantes Definitely file a title claim. My answer above concerned only the 2020 taxes. 

Since you were given a buyer-side only HUD we don't know what was charged to the seller, but apparently it was short. It does appear that you have since been forced to pay some prior years taxes, interest and penalties in order to protect your interests.

Making the claim will immediately force the insurer, agent and seller to figure out who owes what.

Hi Mr Gimer,

today the title insurance has sent me this document that I have attached to this post.

The foreclosure seems vacated and dismissed, is this correct?

Moreover the agent told me if I wish to send a claim, I may and his title company does not file the claim or sign an acknowledgement letter.

What do you think, please?

I have ask to the agent to obtain a refund for the delinquent taxes of the previous owner 

Thank you