Expert: Michael McClure - 8/7/2009

Question
I opened my mail a few days ago to find a notice from the county that my house will be sold for a lien on past due property taxes. The taxes came from the year immediately before my purchase of the home. This was the very first notice that I had that there was any problem with my taxes. I am the kind of person who pays every bill immediately; I have never been late for any payment ever.
That this was the first notice I had of this situation is another question for another day.  My immediate problem is where the $  that was collected at settlement from me as I bought the property went. My  loan officers at CBmtg (could I have put the name??) tells me that they “…will not send in writing, can not send in writing a letter to me that explains what the funds collected on  line 1004 on the HUDc.rpt was collected for. It would be too confusing." My title insurance  firm tells me that this $ was collected to pay the taxes from the past 7 months prior to my purchase.  My subsequent mortgage payments included escrow funds for the next due taxes (November).
Each of the two companies blames the other, and the bank (one employee)  has actually said that the title company person is a liar. I have spent hours on the phone, and spoken to 12 or 13 people between the two businesses.
At the moment I do not have the cash at hand to pay the previous owner’s taxes. The property will go for the lien!!!!!!   The agent at the title company has told me that she will pay out of her own pocket (because of my dire circumstances--family death, daughter in the hospital: when it rains, it pours)) the tax bill and the penalty, even though the evidence is that the mortgage had collected the funds for the tax bill at the settlement.

So the question: if line 1004  on the HUD form (March) records: “County Property Taxes 7 months…”   and my mortgage bills  from April on included escrow payments for the taxes due in November were collected, what is the  line 1004 money for? It is the EXACT amount of the original ’06 tax bill for the former owner.   Now, of course, there are interest charges on the bill, and the notice from the county tells me that I have to pay it by the end of this month (August).
What can I do? What should I do?


Answer
Hello Renee,

I can only give an opinion, as I must assume that you are not in California.  Each county will handle there taxes differently.
Before a title can be offered, it must be clear of liens AND taxes! So it sounds to me like the title company messed up.  Read your escrow papers. I can't imagine that the state would even process the transaction with $$ owed to the tax assessor.

Anything further would have to be considered legal advise, and I can't do that....good luck. MM