Any property lawyers on the board? Need advice!

biosurfer1 · 04-02-2008, 07:49 PM

So I have posted before my problems about my deliquent property taxes that the escrow agent missed and did not pay.

Well things took a turn for the worse today. I went in to pay the current property taxes and learned this is more serious than I was told. A little background... I bought the house in December of last year and recieved this years tax info a few weeks later. First installment had been paid and I owed the second due April 10th, as expected.

In late January, I recieved a notice that there were deliquent taxes from the 2006 roll year that had not been paid. I called the escfrow agent and she told me they had been paid and probably had not cleared yet. This being my first house, I thought that was fine and would give it some time. A week later I called the county and they said nothing had been paid and nothing was waiting to clear either. The escrow agent DID send a check, but that was the one for the first installment of this year, and it had already cleared, but the deliquent taxes were still due.

I called the escrow agent several times and never got a call back. When I did get a hold of her, she tried to blow me off by saying just send her the info. Well that was not going to happen so I took time off work that Friday and went down there. After some checking, etc, she said they had missed it and it would be taken care of...this was Feb 1st. I have called once every two weeks to see if it had been paid and still hasn't. I called 3 weeks ago and after leaving several messages again not getting a call back, I finally got a hold of her and she blows me off saying its not my problem and they are taking care of it.

So today I went in to pay my taxes and they asked me if I knew there were deliquent taxes and I said yes, but they were being taken care of by the escrow agent, but I asked if it was true that it was not my problem, and they said for sure that it WAS my problem and there was nothing tying them to owing the taxes, and that I should consult a property lawyer. Well that got me nervous. I wasn't going to let it go, but figured since they were due before I bought the house, I would not be held accountable for the taxes, but I am. I was also told that I cannot pay the next installment of taxes until deliquent taxes are paid. Not to mention the taxes have gone up every month they have not been paid.

I am in the process of contacting the regional manager of the escrow office I used since the lady I worked with was the branch manager, so no one in the office was above her.

Do I need to get a local attorney for this? Is there something I can say/do to get them off their asses to pay the bill? Getting a lawyer is going to cost me money, will I have no option but to sue if I have to get one? I think its bull**** it will cost me money to get them to pay a bill that was not mine in the first place.

Any help would be appreciated!

stomachmonkey · 04-02-2008, 08:26 PM

I'm not a lawyer but my advice to you is to pay the taxes.

Just because someone was supposed to take care of this does not absolve you of the liability.

The taxman could give 2 ****s who pays, they just want it paid.

Your escrow problem is your problem, not theirs.

911Rob · 911Rob's Garage

Quote:

Originally Posted by biosurfer1

Any help would be appreciated!

I'm not a lawyer, but an employer of them, so I'll chime in:

First, shame, shame! You should've made sure all the back taxes were paid before buying the property or had a written agreement to the otherwise. Once you become the property owner, you become fully liable for all back taxes. This is basic 101 for buying escrowed property.

Second, I don't think you have too much to worry about; with some proper strategy, you'll likely become successful with the desired result.

Should you engage a lawyer, it does not mean that you have to go to court or incur a whole bunch of expenses. You could have a lawyer simply write a letter on your behalf. Good letters cost about a grand.

I would get something in writing from the escrow agent. Go see her again with the facts simply stated on paper, have a discussion with her and repeat the facts to her verbally. When she agrees, bring out the paper and have her sign it, call in a witness for her signature. Inform them that they have 10 days to pay the taxes or they'll be hearing from your lawyer for a class action law suite.

Try NOT to get into a situation where you're asking your lawyer for advise; (***) these guys are brainwashed in law school to only give advise that puts bread on their tables, not yours. Give your lawyer specific instructions.

If you must get a lawyer involved following the 10 day period, the first letter should be from the lawyer, simply stating the facts of the matter and giving them an additional 10 days to provide receipt of paid taxes or a payment plan acceptable to you. If payment is not made in 10 days, inform them that you will take full legal action against them for all expenses, damages, etc.

It goes on from there; but if you play your cards right, you won't have to go this far. I'm sure the escrow agent is bound by law to provide you with the truthful facts in the matter and she will have definate liabilities for her lies or carelessness.

Hope that helps you out.......

*** I know the lawyers that post on this board are the exception to the rule.

Tobra · Tobra's Garage

Brett, I PM'd you my father's phone number. I will give him a call, but am sure he would be able to help much directly, as he is semi-retired and not in real estate law, but am certain that at the very least he would give you some guidance and direct you to someone who could take care of you if he felt that would be a prudent course.

Pretty sure that title insurance would cover this sort of stuff, but I don't know if that is standard, I thought it was.

I will call him in the morning, he does not go into the office too early, sometimes not at all if the weather is nice and he is going golfing. Will give you a holler on your cell tomorrow. He always tells me suing is the last thing you want to do, so he ain't typical

kstar · 09:27 PM

I agree w/ Tobra, seems like the Title Company is on the hook now IF the title ins. policy stated the taxes were paid. Pull out the policy and read it thoroughly.

Otherwise, they are your responsibility. Hopefully your escrow agent is a stand-up person and fixes your problem as promised.

Just my opinion, and I agree that you should get professional advice.

edit: This may be helpful!: http://www.thinkglink.com/Title_Insurance.htm

Best,

Kurt

biosurfer1 · 04-03-2008, 05:42 PM

Thanks for the advice everyone.

After talking to the assessor, they said I am most certianly NOT responsible for the back taxes. It never made sense to me why I could be responsible for taxes due more than a year before I bought the house. That being said, the taxes are secured to my house, but what most people said are correct, this is why you get title insurance. It was a foreclosure, and the taxes that were not paid by the original owner, so it has actually gone through 2 owners and they are still not paid (the bank, then me).

911 Rob: thanks for the advice, but I think you're way off here. First off, maybe I should have checked into back taxes before I bought, but this was my first house, and there are an unlimited amount of things one should check before you buy that there is just not time/money for...hindsight is 20/20. Isn't this the reason you have a title/escrow company, so they can find these things, what good are they if when they miss something its not their fault!?!? Also, it is state law that the title of a property must be clear of liens (back taxes) at the time of transfer, unless its expressly written into the contract. The bank could have gone after original owner for the taxes, but I guess they figure if they couldnt pay the mortgage, they didnt have the tax money. I assume if the bank had the house long enough, they would have paid them. Title insurance will be on the hook for mine since they didnt catch it, and they have the option of recovering them from the bank.

Toby: I just got your message, I will try and call you tomorrow and talk, I'm out of town right now.

I'll update once I talk with the regional manager...we'll go from there.

kstar · 04-03-2008, 05:54 PM

Nice to see the application of title insurance working!

Good luck, biosurfer.

Best,

Kurt

mikester · 04-03-2008, 06:38 PM

Something similar happened to me when we bought our house.

We purchased it from a couple who had only owned it for about 8 months. They did not pay their property taxes. The escrow company did not 'notice' this at all and I did not either. The reason that it wasn't noticed is that it wasn't properly noted in the tax records at the County. When the County got their records straight they tried to bill me for the back taxes. My bank sent me a letter stating that they needed to raise my mortgage to cover the owed taxes (in the tax escrow account).

We went back and forth with the escrow company and finally I contacted the county and talked directly to them. After a while they realized that they were billing the wrong person for the taxes and I Was not liable for them.

Took a couple of months to straighten out but we did.

Dueller · 10:32 PM

Quote:

Originally Posted by biosurfer1

Thanks for the advice everyone.

After talking to the assessor, they said I am most certianly NOT responsible for the back taxes. It never made sense to me why I could be responsible for taxes due more than a year before I bought the house. That being said, the taxes are secured to my house, but what most people said are correct, this is why you get title insurance. It was a foreclosure, and the taxes that were not paid by the original owner, so it has actually gone through 2 owners and they are still not paid (the bank, then me).

I would disagree with the assessor's assessment...at least in most jurisdictions. Property ad valorem taxes constitute a lien on the property, perhaps even superior to a recorded mortgage or deed of trust. And really most controlling is what your deed from the bank says and what type of deed it is. For example, if it were a warranty deed, the seller (bank) warrants title to you subject to whatever exceptions are spelled out in the document. Usually, a WD only excludes current year taxes for which you will be subject to. If this is the case its up to the bank as seller to make good on its "warranty" of your title and correct the tax issue. If it were merely a Quitclaim deed (unlikely), the the seller is only conveying to you whatever title they have in the property, if any. For example, I can sell you the Brooklyn bridge and convey it by quitclaim deed...all I'm doing is selling you whatever interest I have which may be nothing. You proceed at your peril. If the bank conveyed to you by quitclaim, you could be potentially liable for the back taxes. Another type of deed is a trustee's deed which is what the bank got when the property was foreclosed on...and sometimes a trustees deed can wipe out all liens subordinate to the note in default...however property tax liens are not wiped out in my state. YMMV

Ultimately I don't think you'll be responsible for the old taxes...but they still constitute a cloud on your title that will ahve to be corrected/removed. And that's where the escrow agent/title insurance company/seller come in. They will be responsible for correcting the mess. Sadly, it is unlikely they can legally go after the prior owner who was foreclosed on.

If I were in your shoes, I would write a firm, succinct letter to the title insurance company and the escrow agent/company and say : "It has come to my attention there is a cloud on the title to my property in the form of unpaid prior year taxes as a result of your negligence. Please correct this matter immediately. My attorney has advised me to allow you thirty days to resolve your error. Otherwise, place your E&O carrier on notice. "

Send it by certified mail.

CC the bank who sold it to you and your mortgage company.

It should get fixed in short order.

PS: Rob911..see, you're wrong about attorneys trying to jack up their bills.

Tobra · Tobra's Garage

Okay Brett, spoke to dad yesterday afternoon. He said it is all dependant on what the contract says. When you get back in town, we can have him look it over and he should be able to give you some guidance, whether it would be worthwhile to file suit, which at first blush he thought it might cost more than you could recover if an attorney is writing your letters.

Good advice from Dueller on this, ceritfied letters are far superior to a phone call. If you had a real estate agent, they had a responsibility to look out for your interestests, something that nobody seems to mention with all this subprime stuff. 30 day letter is good, then if you end up in front of a judge, you are saying, "Your honor, I am sorry to waste the courts time with this, I tried to resolve their error without resorting to legal action." and they are saying, "Well it is his house now, he should have checked that out" or something lame and ridiculous to that effect. I will give you a call over the weekend and see about Pops having a look at your stuff, keep in mind he is not a RE guy, but he almost certainly could put you together with one if that looks like the way to go.

I would expect them to jump pretty quick when they get a letter from you, can't prove a telephone conversation, but a letter is tough to dispute.

kstar · 04-04-2008, 07:16 AM

Am I missing something here?

Biosurfer said the Title Co. missed the delinquent taxes in his policy. If so, they should be liable for the taxes, yes?

Quote:

Title insurance will be on the hook for mine since they didnt catch it, and they have the option of recovering them from the bank.

Best,

Kurt

Dueller · 09:38 AM

A few final notes/observations.

First, it is not unusual that there are prior unpaid taxes on foreclosed property. What is unusual is that an escrow company/title insurance company "missed" them.

Second, you (personally) can't use the excuse "I was so busy...this was my first home purchase...you can't expect me to check out everything." That IS your responsibility. Fortunately, you delegated that responsibility to your escrow company/title insurance company/closing attorney. So someone in that mix is going to be responsible for the taxes IF the deed you received transferred the property subject only to current year taxes. And it is entirely possible the selling bank will ultimately be responsible for the taxes IF their deed conveyed it to you by warranty deed subject only to current year taxes. But that is for the escrow/title company to pursue...not you.

Third...I don't know that the real estate agent bears any responsibility in this mess...clear title is outside their area of expertise.

Finally...by placing the Bank/title co/closing atty on notice of their mistake and giving them a reasobnable chance to fix it serves another purpose...if they fail to do so and it causes you additional grief/expense, then you can sue them for the initial damages of the taxes and, MORE IMPORTANTLY, for bad faith. And THAT's where the real money is

My predictions are A) the back taxes will be paid B) by someone other than you.

biosurfer1 · 04-04-2008, 05:54 PM

Dueller... thanks for the advice. I am in the process of writing a letter right now. I have now left 2 messages for the regional manager and have heard nothing, doesnt say much for the company.

The only thing I don't agree with is that I should have caught this. If the agent is off the hook because that was not his area of expertise, and the title/escrow company obviously did not catch it, how was I supposed to know about it? I read everything on the internet about buying a house for more than a year, and did everything I read about what to do before you buy a house...and no where did I once read anything about checking to see if there were deliquent taxes. Once I decided on a house, I was more woried about getting inspections done, dealing with the mortgage, etc. I did ask about liens on the house to the escrow company, who said it was clear. I don't know if deliquent taxes are considered a lien, but I took it at thier word that the house was clear. Maybe that was my mistake, but I believe it is completely impossible to check every little detail of a house in the 30 days of escrow without relying on help from others, this is what you pay them for.

The hardest thing now is to word this letter and not let my anger get the better of me!

thanks guys!

kstar · 06:22 PM

Well, this seems very simple to me.

As others have stated above, the delinquent taxes are a 1st lien on the property.

This is an obvious exception to title missed by the title co. and should be explicitly covered in the title ins. policy.

You have a clear claim with the Title Co. under the ins. they issued! File your claim under the guidelines outlined in the policy.

Maybe my aging mind is missing something, but I think this is a simple title ins. claim. Or does everyone have me on ignore.

Best,

Kurt

biosurfer1 · 04-04-2008, 09:55 PM

I hear ya Kurt

i'm going over my policy as we speak...tough finding what i'm looking for in it though!

Dueller · 11:18 PM

Quote:

Originally Posted by biosurfer1

Dueller... thanks for the advice. I am in the process of writing a letter right now. I have now left 2 messages for the regional manager and have heard nothing, doesnt say much for the company.

The only thing I don't agree with is that I should have caught this. If the agent is off the hook because that was not his area of expertise, and the title/escrow company obviously did not catch it, how was I supposed to know about it? I read everything on the internet about buying a house for more than a year, and did everything I read about what to do before you buy a house...and no where did I once read anything about checking to see if there were deliquent taxes. Once I decided on a house, I was more woried about getting inspections done, dealing with the mortgage, etc. I did ask about liens on the house to the escrow company, who said it was clear. I don't know if deliquent taxes are considered a lien, but I took it at thier word that the house was clear. Maybe that was my mistake, but I believe it is completely impossible to check every little detail of a house in the 30 days of escrow without relying on help from others, this is what you pay them for.

The hardest thing now is to word this letter and not let my anger get the better of me!

thanks guys!

No no no...I'm not saying you did anything wrong...you did the right thing by hiring the escrow company/title ins company. What I'm saying is under the eyes of the law its the buyers responsibility from a legal standpoint to make sure he's getting what he's paying for. Even though I know a bit about property, I would still hire the independent experts to handle my RE transaction. They are more objective and it shifts some of my ultimate rsponsibility to them. You did the right thing. That's what you paid them for.

Keep your letter brief and to the point. The more you write the more you risk saying something they use against you. Three or four terse sentences should suffice, Brevity is key. To the point of being terse. Make your final sentence: "With warmest personal regards, I remain

Sincerly yours,

Biosurfer"

Then CC everybody from the bank to the tax assessor to your mortgage company to the closing attorney, the real estate agent and your mom (j/k on mom

)

Cease all communications by phone until someone says "We straightened out the tax problem."

It'll work out.

Dueller · 11:42 PM

Quote:

Originally Posted by biosurfer1

I hear ya Kurt

i'm going over my policy as we speak...tough finding what i'm looking for in it though!

Start by looking at the binder...should have a section that says "there is excepted from this opinions the lien for current year taxes; misdescription in survey of the property...yadadadad"...something to that effect. It will likely be in the front of the policy and not a part of the boilerplate.

Do you have a copy of the actual deed? I'd start there. Post the language in the deed...no needto put property description...just the words of conveyance and exceptions would help me tremendously. E.g., "For $10 cash in hand paid and other good and valuable consideration, the receipt and sufficiency which is hereby acknowledged, ABC Bank does hereby sell, convey and warrant into Bobby Biosurfer the following property lying and being sutuate in Harlan County, Kentucky and more particularly described in metes and bounds, to wit: A tract of land containing 900 aces....yadadadadada" There is excepted from this conveyance the following: 1. Taxes for the current year which have been prorated as of the date of this deed.; 2. the lien of that certain deed of trust.....3. Mineral or riparian rights previously conveyed to ...yadadadada...."

Don't let this experience sour you...in the big scheme of things the tax screw up is relatively minor and easilyfixed once you get their attention. A PITA but still not crazy serious. E.g., I had a client who did not purchase title insurance, bought a house on some rural acreage with cash and moved in. Only problem was that his deed conveyed another piece of property on which there was no house. Plus, the house he was in was deeded to a third party who was occupying what he thought was his house. ..who went into bankruptcy and the note was foreclosed on. A fourth party bought the house at the foreclosure sale from the bankrupt 3rd party's lender and wanted to move in to the house the bankrupt guy was in. .

So you had:
My Client Owner 1 living in House A but having a deed to vacant lot B.
Owner 2 thinking he owned vacant lot B but his deed was to House C.
Owner 3 thinking he owned House C but his deed was to House A.
Owner 4 thinking he was buying Owner 3's House C but actually bought House A at the foreclosure sale.

Talk about a clusterfock.

See....It could be worse

turbo6bar · 04-05-2008, 05:13 AM

I bought a HUD foreclosure that had back taxes. The attorney's title search failed to find it. I phoned my go-to girl RE agent. She made a few phone calls, and the problem was solved. I presume the attorney had to eat the back taxes, because I did not have title insurance. That attorney is now in jail for fixing tickets.

Dueller is one the right track. Be firm, terse and polite. The title company dropped the ball. It happens.

Paul_Heery · Paul_Heery's Garage

Quote:

Originally Posted by turbo6bar

That attorney is now in jail for fixing tickets.

I didn't realize that attorneys had that ability. Doesn't that require someone on the "inside"?

biosurfer1 · 04-05-2008, 09:32 PM

Thanks Dueller for all the advice. The letter was written just about as you said, hopefully this will get everything taken care of...

I went through all of the paperwork I got with the house and I did find reference to the fact that there were back taxes on the house. My parents came over tonight and I gave them to my mom since my uncle is a lawyer and wanted to take a look at everything, so she was going to drop them off.

I didn't get a chance to write down the exact wording but it was somehting to the effect of :

There was an Appendix A and then Appendix B. I forget the exact wording on the title of Appendix B, but that page had the current year property taxes, 1st installment/2nd installment, and how much they would be. the next item on the page said it is determined that there are deliquent back taxes on the house of $xxxx.xx amount for roll year 2006-2007, and that's about it. It did say something about exceptions (or maybe exemptions?) at on the top of the page, but does not go any further about the taxes, and that is the only mention of back taxes on any page. This is one of the many, many pages the escrow agent throws at you during the signing. I slowed down and read about as much as I could while signing because I refused to just sign stuff I didn't at least somewhat read, but unfortunetly this is one of the pages that even now, when I read it carefully, I could not understand, so I figured it best to have uncle lawyer take a look.

My first thought with the words "exceptions" at the top was "oh $hit, I am on the hook" but it mentioned the current year taxes and the first installment was paid by escrow, so now I'm not sure. Hopefully I'll find out early next week. I'll still be sending the letter no matter what.

The saga continues...