Managing a Tax Lien through Title Insurance
Rental Property Investor · New York NY (brooklyn, ny) · Member since 2019 · 76 posts · 79 votes
Managing a Tax Lien through Title Insurance
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Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
3y@Kristina Anderson PAY THE TAX LIEN Then worry about being reimbursed later.
You don't want the additional cost of overturning a foreclosure. Even if someone else ultimately pays the cost; it is time, money and risk you don't want to take.
I am not an attorney, this is not to be considered legal advice but it sure is how I would handle it.
52 Replies
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes3y
Since you have about a week, I would send an additional notice to the Westcor via their email claims box reenforcing the urgency of a rapid decision. I might also put a call into their office in Maitland, Fl and ask for the Claims Manager. If it hasn't changed the phone number is (407) 629-5842. In my experience if they realize there is a time constraint they'll move quickly. If I hadn't received a response by Wednesday, I'd probably pay it myself and demand reimbursement. I'd also notify the title agent of the problem who may take responsibility and pay it themselves.
- Rental Property Investor · New York NY (brooklyn, ny) · Member since 2019 · 76 posts · 79 votes3y
@Peter Walther Thank you. The title agent basically sent me to title insurance, didn't even say "I'm sorry you have to deal with this" even though it was her very clear mistake. She also missed out on arrears to tax abatement office, as well, which we coughed up last fall.
I will pester the title insurance company again Monday first thing. The woman I spoke to today didn't seem that experienced. What a headache!
- Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes3y
@Kristina Anderson PAY THE TAX LIEN Then worry about being reimbursed later.
You don't want the additional cost of overturning a foreclosure. Even if someone else ultimately pays the cost; it is time, money and risk you don't want to take.
I am not an attorney, this is not to be considered legal advice but it sure is how I would handle it.
- Lender · rate.bid · Member since 2022 · 324 posts · 62 votes3y
Clearly an example how the errors or actions of an agent or employee.. can become the liability of the employer.
Whoever you are dealing with probably does not comprehend the gravity of the screwup.
You want to deal with an officer or director of some sort. If the property is foreclosed on due to a title company error.. the title company becomes liable not just for whatever the tax lien was but possibly for the entire value of the property/insurance policy at the very least.
- Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes3y
#1 Contact the taxing authority and advise them you were not properly notified and get them to update your address.
#2 Tell them you are processing a claim with title insurance company. Around me that would be enough probably to hold them off. Not sure in your area. I'm guessing in most places they don't want to foreclose. They want you to pay. So that is the goal. You might even have them set you up on a payment plan.
#3. You might ask if they can waive penalties and late fees. In my area they often say you know you have to pay taxes. Not our job to hunt you down, even though we often do. However that is not an excuse for not paying. In my area they seem to bend over backwards though helping people get through. I have not seen they waive the penalties and interest or extra interest, but they seem very open to payment plans, so you can discuss with them.
#4. This as well as all the other actions your are taking.
As @Ned Carey wrote, you don't want a foreclosure and you don't want any of the headaches that might bring.
Although I agree with a lot of what has been stated above about making sure this gets paid ASAP, based upon what I've seen in this arena I would just make certain that notice of the claim has been properly given under the policy and then let the insurer deal with it.
Making payments (essentially settling on behalf of the insurer) and assuming they will be covered and reimbursed in full carries some risk and may actually conflict with the terms of the policy... give us timely notice; let us fix, defend or pay; cooperate, etc. No dollar figures (crucial to the analysis) have even been provided in the fact pattern.
Think about what happens if the tax lien sale from 2021 is eventually determined to be void.
Gimer Law516 Reviews- Rental Property Investor · New York NY (brooklyn, ny) · Member since 2019 · 76 posts · 79 votes3y
All this is great advice. I tend to want to pay it off because it worries me that it’s outstanding. But I’m going to talk to title insurance Monday before I make a final decision. Two additional questions: how long does the settlement process with title insurance normally take and it’s gone to foreclosure - late November! - how long does that process last?
This is all crazy. We had a seller who didn’t conduct his business above board and a title company who slept through the process it seems.
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes3y
Quote from @Kristina Anderson:
All this is great advice. I tend to want to pay it off because it worries me that it’s outstanding. But I’m going to talk to title insurance Monday before I make a final decision. Two additional questions: how long does the settlement process with title insurance normally take and it’s gone to foreclosure - late November! - how long does that process last?
This is all crazy. We had a seller who didn’t conduct his business above board and a title company who slept through the process it seems.
You haven't mentioned how much is owed but I suspect it's a modest amount. You also haven't mentioned the amount of insurance under your title policy, but I also suspect it's considerably more than the amount owed. If those two assumptions are correct and based on the fact the claims analysis should be fairly straight forward, I lastly suspect the insurer will handle this quickly, though I would stand by with checkbook in hand ready to pay off the lien in advance of the sale.
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes3y
Quote from @Kristina Anderson:
@Peter Walther Thank you. The title agent basically sent me to title insurance, didn't even say "I'm sorry you have to deal with this" even though it was her very clear mistake. She also missed out on arrears to tax abatement office, as well, which we coughed up last fall.
I will pester the title insurance company again Monday first thing. The woman I spoke to today didn't seem that experienced. What a headache!
I'd consider filing a complaint with the NY Department of Insurance. The Department has been at odds with the title industry for some time. I might also consider filing a complaint with the Consumer Financial Protection Bureau (CFPB).
- Rental Property Investor · New York NY (brooklyn, ny) · Member since 2019 · 76 posts · 79 votes3y
Quote from @Peter Walther:
Quote from @Kristina Anderson:
@Peter Walther Thank you. The title agent basically sent me to title insurance, didn't even say "I'm sorry you have to deal with this" even though it was her very clear mistake. She also missed out on arrears to tax abatement office, as well, which we coughed up last fall.
I will pester the title insurance company again Monday first thing. The woman I spoke to today didn't seem that experienced. What a headache!
I'd consider filing a complaint with the NY Department of Insurance. The Department has been at odds with the title industry for some time. I might also consider filing a complaint with the Consumer Financial Protection Bureau (CFPB).
Unfortunately this is in Cincinnati and we are in NYC. Yes modest amount about 11k. In a weird turn of events the title company “closed” and the agent is with another - same address, email etc. I don’t think this is related. But first things to resolve this and then to perhaps raise the flag to the BBB etc in Cincinnati.
- Lender · rate.bid · Member since 2022 · 324 posts · 62 votes3y
Something smells fishy here... you might be a victim of fraud. Tax liens are literally the most basic of liens that any title co deals with.
A BBB complaint might only get you a giggle from the title co here. You want to deal with an entity or body that can prosecute -- attorney general office, some governmental agency, whoever regulates their activities etc.
What is unfortunate is that some state agencies (depending on what state you are in or your issue) can often be just as filled with absolutely corrupt ineffective personnel if not worse. And if the entity (title co) is out of business.. you just might have been double f*%&$% -- excuse the french.
- Rental Property Investor · New York NY (brooklyn, ny) · Member since 2019 · 76 posts · 79 votes3y
Quote from @Frank Greg:
Something smells fishy here... you might be a victim of fraud. Tax liens are literally the most basic of liens that any title co deals with.
A BBB complaint might only get you a giggle from the title co here. You want to deal with an entity or body that can prosecute -- attorney general office, some governmental agency, whoever regulates their activities etc.
What is unfortunate is that some state agencies (depending on what state you are in or your issue) can often be just as filled with absolutely corrupt ineffective personnel if not worse. And if the entity (title co) is out of business.. you just might have been double f*%&$% -- excuse the french.
We agree. Very fishy. First to settle this lien issue then to get Justice. I’m honestly thinking the woman just wasn’t that smart. We had problems all through. Just getting her to do the work. This should have been an easy catch so I’m a bit flummoxed by it all.
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes3y
Quote from @Frank Greg:
Something smells fishy here... you might be a victim of fraud. Tax liens are literally the most basic of liens that any title co deals with.
A BBB complaint might only get you a giggle from the title co here. You want to deal with an entity or body that can prosecute -- attorney general office, some governmental agency, whoever regulates their activities etc.
What is unfortunate is that some state agencies (depending on what state you are in or your issue) can often be just as filled with absolutely corrupt ineffective personnel if not worse. And if the entity (title co) is out of business.. you just might have been double f*%&$% -- excuse the french.
I have about thirty years' experience handling title insurance claims for various underwriters which informs my opinion that while there are situations where a title agent has committed fraud, this doesn't sound like one of them. Mistakes in the search and examination of title, the preparation of the commitment and closing of the transaction happen every day due to inexperience, rush to satisfy demands to close and yes negligence, which generally is not fraud. As far as prosecution, even if this problem turned out to be fraud, as long as Kristina is made whole by the insurer, she has not been the victim of a crime. Maybe the insurer has but not Kristina. in addition, with all the crimes involving murder and mayhem, getting a prosecutor to take an insurer's having suffered an $11k loss as a crime seriously is pretty remote.
- 3yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
Quote from @Ned Carey:
@Kristina Anderson PAY THE TAX LIEN Then worry about being reimbursed later.
You don't want the additional cost of overturning a foreclosure. Even if someone else ultimately pays the cost; it is time, money and risk you don't want to take.
I am not an attorney, this is not to be considered legal advice but it sure is how I would handle it.
What Ned said.
Also how much is this lien for?
- Property Manager · Leominster, MA · Member since 2022 · 103 posts · 50 votes3y
@Kristina Anderson.
1. Reach out to the town, provide them with something in writing reflecting that you have initiated a claim with your title company & that you expect them to pay.
1a. The town should delay things
2. Wait for the adjustor
- Lender · rate.bid · Member since 2022 · 324 posts · 62 votes3y
You cannot expect anyone marginally of sound mind to tolerate a mess of this sort. The probability of a title co 'missing' a tax lien is just absurd.. then on receipt of a complaint from the buyer, title co mysteriously closes (ceases to exist) but same agent is operating at the same address under some other name? Who has an inexperienced staff perform title search and issue a title insurance policy? You might want to consider a career in comedy.
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes3y
Quote from @Frank Greg:
You cannot expect anyone marginally of sound mind to tolerate a mess of this sort. The probability of a title co 'missing' a tax lien is just absurd.. then on receipt of a complaint from the buyer, title co mysteriously closes (ceases to exist) but same agent is operating at the same address under some other name? Who has an inexperienced staff perform title search and issue a title insurance policy? You might want to consider a career in comedy.
The best comedy is based on reality. Absurdity is funny, except when you're the punch line. Would it surprise you to know a great deal of title search and examination is done in the Philippines and India? How much experience with American title theory do you think they have? Even better, title insurers have started to move to rules-based underwriting. That is, insuring based on an automated decision tree, no human involvement. How's that for comedy?
American Digital Title Insurance Company Further Expands Its Automated Underwriting Model - Lender · rate.bid · Member since 2022 · 324 posts · 62 votes3y
That is certainly comical. Equally comical is the fact that someone would expect a buyer who was issued a title insurance policy with a purchase to expect a title defect and an 11K tax lien after closing because the title co supposedly dropped the ball.
Just try to imagine at closing... what does the title co tell the buyer? "...hey sir/mrs... you might want to do your own title search... because we might not know what we are doing..." ? Is that before of after you charged the title fee?
What I might want to know is what sort of deed did @Kristina Anderson get from the seller. This is why you never ask for anything other than a General Warranty deed.
- Contractor · Aptos, CA · Member since 2020 · 32 posts · 11 votes3y
I'm on here researching tax lien investing, and stumbled on this thread.
I don't have any prudent advice beyond what all you other experts have stated since I am learning, but this is interesting to learn mistakes like this can happen. So I am wondering from the perspective of the person who purchased the tax lien certificate (I'm assuming someone purchased it): do they not get paid there money back plus interest in this case? or maybe they get paid back their initial investment plus interest as soon as Kristina pays it off..
Or maybe there was no Tax Lien Certificate sale yet since the tax delinquent date was some time overlapping the sale of the asset to @Kristina Anderson?
- Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes3y
@Tom Gimer interesting what you bring up about paying the lien may be against the terms of the insurance. As someone who has foreclosed on properties where the title company screwed up, just like this situation, I can tell you that it is very hard to reverse.
@Kristina Anderson Given what Tom Gimer said I would definitely talk to the title company first, but I would not totally rely on them. Tom Gimer is a really smart guy and runs a good title company but many title companies are not very good and lack of follow up can cause real problems. They may have paid the taxes and have receipts. In MD you cant even record a new deed without all the taxes being paid. It is possible the lien is a mistake and could be voided.
Another important point is do you actually have title insurance? You may have paid for it. It may be on the HUD -1, but did you actually receive a policy. The fact your title company went out of business and reopened under a different name is what makes me ask the question.
That said If I am the lien holder and I get a judgement for foreclosure I am going to fight very hard to uphold it. Most of the time we win any challenges to a completed tax foreclosure.
- Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes3y
@Kristina Anderson in Maryland a tax sale foreclosure takes about six months to a year. In Maryland you can apply to the court to set the cost of redemption. This will stall the case for two months+ until the court rules on the exact amount. It is just a stalling tactic but may work in OH too.
@Frank Greg wrote
A BBB complaint might only get you a giggle from the title co here. You want to deal with an entity or body that can prosecute -- attorney general office, some governmental agency, whoever regulates their activities etc.Title companies are basically just insurance agents for the underwriting insurance company. Your insurance is actually from one of a handful of national title insurers. They would be one of the first to go to to get this resolved and put pressure on the local title company.
- Rental Property Investor · New York NY (brooklyn, ny) · Member since 2019 · 76 posts · 79 votes3y
@Ned Carey We do have title insurance, and we have already filed a claim and hope to have an adjustor assigned tomorrow or Tuesday. I will follow-up tomorrow. The title company (the agent - small company) sent us over to title insurance (Westcor) to deal with this issue. This should have been caught by them - it was clear on the auditor's site that the tax lien had been sold. We missed it because the format of the cincinnati auditor's site is less "helpful" than other cities we market in. We can now see clearly that taxes weren't paid for 2020 and part of 2019. If we continue in Cincinnati, this will never happen again with this new knowledge we've accrued!
Also, tomorrow, I'm going to ask to get in touch with the attorney handling the foreclosure process. The City has said that they can't "hold off" and the attorney advises not to in case there will be double billing if they don't receive payment. I think it's hot air, myself. We haven't seen any old bills, any communications to the former seller (that apparently kept going to him well after we purchased - the City couldn't figure out that the address had changed?!)
And, yes, once I wrangle these couple of things, I'm going back to speak to my attorney about how we hold title responsible. At the very least, she might have acknowledged that they could have caught this. I think this is gross incompetence. They at least need to own that they should have caught this and apologize for my headache. It was a sloppy closing as I've said, but this is the icing on the cake!
- Lender · rate.bid · Member since 2022 · 324 posts · 62 votes3y
(We do have title insurance, and we have already filed a claim): This is really all you have to do. Once you have contacted whoever is behind the title policy, this becomes their headache.
(it was clear on the auditor's site that the tax lien had been sold. We missed it because...): this is technically not relevant. You as the buyer are not a title agency, you are not in the business of investigating and catching tax liens that the title company misses nor are you required to be second guessing title company's work. This is literally what you got title insurance for.
I doubt the title agent you worked with is a direct subsidiary of the underwriter but that is also irrelevant. If the underwriter is hiring title agents who don't know what they are doing, or having some title agent in Manilla perform searches, not your problem. This is not an excuse when they get hit with a claim.
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes3y
Quote from @Frank Greg:
That is certainly comical. Equally comical is the fact that someone would expect a buyer who was issued a title insurance policy with a purchase to expect a title defect and an 11K tax lien after closing because the title co supposedly dropped the ball.
Just try to imagine at closing... what does the title co tell the buyer? "...hey sir/mrs... you might want to do your own title search... because we might not know what we are doing..." ? Is that before of after you charged the title fee?
What I might want to know is what sort of deed did @Kristina Anderson get from the seller. This is why you never ask for anything other than a General Warranty deed.
I don't think someone should expect a title problem any more than one should expect a doctor to take out the wrong kidney or a car mechanic to replace the alternator when the problem is the battery. That is why a buyer gets title insurance, a title agent has Errors and Omissions insurance, a doctor has malpractice, a mechanic, well I don't know what they have to make an injured party whole. I also think a person should expect an error to be less likely when a professional does the job then when they do it themselves.
The thought of someone relying on deed warranties for relief is really funny.
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes3y
Quote from @Ned Carey:
@Tom Gimer interesting what you bring up about paying the lien may be against the terms of the insurance. As someone who has foreclosed on properties where the title company screwed up, just like this situation, I can tell you that it is very hard to reverse.
@Kristina Anderson Given what Tom Gimer said I would definitely talk to the title company first, but I would not totally rely on them. Tom Gimer is a really smart guy and runs a good title company but many title companies are not very good and lack of follow up can cause real problems. They may have paid the taxes and have receipts. In MD you cant even record a new deed without all the taxes being paid. It is possible the lien is a mistake and could be voided.
Another important point is do you actually have title insurance? You may have paid for it. It may be on the HUD -1, but did you actually receive a policy. The fact your title company went out of business and reopened under a different name is what makes me ask the question.
That said If I am the lien holder and I get a judgement for foreclosure I am going to fight very hard to uphold it. Most of the time we win any challenges to a completed tax foreclosure.
I don't think Tom was suggesting allowing the foreclosure to happen, just to allow the insurer some time prior to the foreclosure to investigate the matter and decide if it's a covered matter and if so what to do about it. I've had situations where I came to the conclusion a foreclosure action was improper and hired counsel to file a notice of appearance on behalf of the insured to put on a defense thereby stopping an immediate foreclosure judgment. I also think Tom wasn't suggesting there's something in a policy that prohibits an insured from making the payment, only that if the payment was unnecessary or somehow impedes the insurer from mitigating the loss, the insured might not recover what they paid out. That's why it's important to give the insurer notice of the problem as soon as the insured becomes aware of it and give them some time to react.
Much has been made in this thread of the agent having closed the office and reopened under a new name alluding to this as being indicia of fraud. In my experience it's more likely the original agency either was bought by or merged with another, possibly more experienced agency. If the agent was committing actual fraud, they probably would have closed and skipped town.
There was an agent in south Florida named Roger Gamblin, well known and respected, who did so and then made a guest appearance on America's Most Wanted. Comedically, he was captured when he went to a heart doctor while he was on the run to have his pacemaker checked. What he didn't know is a pacemaker has an imbedded pin, sort of like the chip you have implanted in a dog or cat, that is registered to the patient. When the name that came back to the doctor didn't match the name the patient had given, the doctor called the police, and the jig was up.
Roger Gamblin, Fla. Fugitive, Arrested in Heartstopper; Pacemaker Revealed His Identity, Says Report - CBS News
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