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Tax Lien on property which occurred after closing but prior to the deed being recorded

I purchased my home back in 2010.  Just recently, I found out that there is a Tax Lien on my property from not paying Q2 taxes in 2010 (Closing was 4/20/2010 and Taxes were due 5/1/2010).  The taxes should have been paid through my escrow account with my mortgage company, but the taxes were not due to a mistake in my Settlement Statement.  The Settlement Statement lists the Q2 Taxes for my escrow account, but when you add up the numbers manually, the actual total that I paid in closing costs does NOT include the Q2 Taxes.

I understand that I'm responsible for making sure my mortgage company pays my taxes, but that was something I didn't even think about because the amount did show up on the Settlement statement.

To make matters worse; I was never notified about my taxes not being paid.  I'm almost positive that this is because the deed wasn't recorded until 9/30/2010.  The previous owner probably received the notice and ignored it.

I even refinanced recently in mid 2012, and the title company didn't even see that their was a lien on the property (I didn't know about the lien).

Here is a timeline:
    Closing: 4/20/2010
    Q2 Taxes Due: 5/1/2010
    Tax Lein Issued: 9/1/2010
    Deed Recorded: 9/30/2010
    Received Notification of Lien/Foreclosure proceedings: 12/5/2012

I do plan to pay the lien (I don't think I have any choice at this point), but my question is: Do I have any legal recourse for any of the mistakes during closing or negligence to record the deed in a timely manner? I now have additional fees/interest that needs to be paid on the lien and I don't feel like I should be held accountable for those additional fees.

  • December 07 2012 - US
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Answers (4)

Some title insurance offers 'gap coverage' to cover the period between closing and when the deed is recorded. However this is most often limited to issues like mechanics liens that belonged to the previous owner that had not been filed prior to closing but ended up being attached to the title prior to the deed being recorded.

As the tax assessment (and lien) occurred after closing, title insurance wouldn't be applicable in this scenario.
  • December 09 2012
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Profile picture for wetdawgs
@Crystal:

Title insurance is an insurance policy that provides protection against financial loss resulting from defects in  real estate ownership rights that were unknown to the buyer at the time they purchased the policy.   Title insurance does not cover tax bills coming due after purchase.    The issue described was a tax bill after closing, not before closing. 
  • December 09 2012
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Did you purchase Title Insurance at closing?  You can file a claim if you did to get this resolved. Check your HUD 1 settlement sheet to see or you might have wrote a check at closing for it. Also, check with your lender to see if they purchased a lenders title policy. If they did, then I would check with them and see if they can file a claim.
Good Luck!
  • December 09 2012
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Profile picture for wetdawgs
You are right, once you've closed on the property you are responsible for the tax bills.   It is clear that things were muddled, but it seems like a life lesson learned (i.e. keep track of tax payments and insurance payments especially right after closing) rather than an assign blame issue.    I suspect you'd spend more getting an attorney involved than if you pay the penalties.



  • December 07 2012
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