Q: Last year I purchased a foreclosed property. This week, I received a notice from my county treasurer claiming I owe $4,500 in back taxes, penalties, and interest from three years ago.
My closing documentation and title insurance papers make no mention of any such outstanding taxes. I do not appear to have a copy of the title commitment from the purchase of my property. What should I do?
A: While you weren’t specific about the type of foreclosure that was involved with your purchase of the property, you mentioned that you were missing the title commitment from your closing.
The title commitment is the document that is given to, or obtained by, a buyer prior to purchasing a home. This document shows what issues affect the property, including any back taxes still owed.
Upon closing on the purchase of the property, any issues raised on the title commitment and taken care of at the closing of the purchase are then reflected on the title insurance policy for the property.
Whey you pay for title insurance, you must make sure that it is for an owner’s title insurance policy. An owner’s policy will protect the buyer. If a title insurance policy is obtained for a lender, it will not protect the owner. It may indirectly protect the owner, but the general recommendation is that every buyer obtain an owner’s title insurance policy whenever they buy a property.
If you find the commitment, it might show that taxes were still owed on the property. You may also find out that they were paid at the closing. If they were paid at the closing, but somehow the title company failed to have them paid, the title company will have to be responsible to get them paid. On the other hand, if the title commitment showed that the taxes were owed and they were not paid by the seller at the closing, you may find that your title insurance policy shows that these taxes were unpaid and you will have to now pay them.
Finally, if the title commitment did not show that these taxes were owed and the title insurance policy does not show that these taxes were owed, the title company may have made a mistake and will be obligated to pay the back taxes.
You need to get all of your documents together from the purchase, find you title insurance policy, if you received one, and sit down with a member of the company that issued the title insurance policy to file a claim against them to have the taxes paid. If you find that you do not get cooperation from the title company, you will need to file a formal claim against the title company. Please make sure you follow all of the procedures listed in the title insurance policy for filing a claim. Good luck.
Published: Dec. 22, 2004