Back Taxes Owed On Foreclosed Property
Ask the Real Estate Lawyer: Real Estate Law Q&A
By Ilyce R. Glink and Samuel J. Tamkin
Summary: After purchasing a property in foreclosure,
the reader receives a notice for back taxes. Ilyce and Sam explain the importance
of getting the title commitment at the time of purchase.
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.
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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
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.
Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce
R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your
Home Faster and For More Money In Any Market. If you have questions for
them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022
or contact them through Ilyce’s website www.thinkglink.com