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Q: I bought a home in 2013 and received free and clear title to it. However, this week I was served with papers for foreclosure because of the previous owners nonpayment of back taxes. It appears the town failed to disclose the tax amount when researching the deed. Do I have any recourse? It’s more than $6,000.
A: Yikes. Time to dig out the owner’s title insurance policy we hope you bought when you purchased the home.
This is an excellent example of why every homeowner should purchase an owner’s title insurance policy when they buy a home. It has been six years since your purchase and you are only now finding out about a problem with the prior owner’s nonpayment of real-estate taxes on the home.
An owner’s title insurance policy should cover your loss should you decide to pay the unpaid real-estate taxes. You will have to follow the specific requirements listed on the title insurance policy to notify the title insurer of your claim on the policy so that they can either defend you against the tax collector’s office or write a check for those back taxes.
An owner’s title insurance policy is there to protect an owner against claims and issues that existed before the date of the policy and that surface or become known after closing. We are talking about title issues, and not home inspection or quality issues. For example, forgery in the conveyance documents, liens that become known after closing, and, as you found out, real-estate taxes that should have been paid before closing but were not.
That said, if you didn’t get an owner’s title insurance policy when you bought the home, you are going to have to pay the bill or risk losing the property. Or at least, you will have to go to the county office that is sending you the bill and make a thorough investigation to make sure the bill is legitimate and not duplicative or in error.
Send questions to Real-Estate Matters, 361 Park Ave., Suite 200, Glencoe, IL 60022, or contact author Ilyce Glink and lawyer Samuel Tamkin at www.thinkglink.com.