Q: Subsequent to the purchase/settlement of my condo, I began receiving claims of delinquent real estate taxes that the seller had neglected to pay from a previous year, prior to my purchase of the property.
I notified my settlement agent, who asked that the seller look into the matter, and I have emailed the seller to see what he had done about it.
After several months, the delinquent taxes still have not been paid and penalties are being added, as well as a threat from the tax bureau to sell the property at auction.
What is my liability here for unpaid real estate taxes that rightfully are owed by the seller? What is the settlement agent’s responsibility?
A: This, unfortunately, is a problem, although more so with unpaid condominium fees than with real estate taxes.
This was the clear obligation of the settlement agent.
When you go to settlement (or escrow) you expect to get clear title, free and clear of any liens, condo fees and/or real estate taxes. In fact, you have the right to obtain an owner’s title insurance policy, which provides coverage in the event there are any clouds on your title.
The settlement agent made a mistake. It was his or her obligation to do a title and lien search, and make sure that all real estate taxes and condo fees were paid to the date of settlement. If there are any such unpaid obligations, the settlement agent should have deducted them from the sales proceeds that were given to the seller.
My suggestion: If you did obtain an owner’s title insurance policy, file an immediate claim with that title insurance company.
Your settlement agent has the further obligation to give you a copy of the title policy.
If you obtained a mortgage when you went to settlement, contact your lender. At the very least, your lender has title insurance, and it clearly does not want you to lose your property at a tax sale.
You can probably expedite all of this by retaining a lawyer knowledgeable about real estate. That attorney should be able to resolve the problem with just one strong letter to the settlement agent.
Q: I often hear the words “fee simple.” What exactly does that mean?
A: The word “fee” comes from the old English feudal system.
The lords owned their land — called a fief — and would parcel out land to their underlings. While those in possession of the land would have certain rights in and to the property, the lord owned the fief in “fee simple.”
More Top Picks Best 3 Stage Snow Throwers
In English: full and complete ownership.
Questions for this column can be submitted to [email protected].