Short Sale Property taxes and Title Company Error

After submitting a short sale offer on 2/18/12 (I have the buyers), we recd the two bank approvals letters last week for a May 14th close date. Representing the buyers I never request to review the sellers HUD for bank but I did on this one and then found out that the title company did not include 2010 back property taxes for $12,000. A revised HUD was submitted to BAC reducing the banks net now by $12000.00 but the bank refused to pay it with the excuse that they never pay back taxes. First, I know this is false as I have seen them pay back taxes...SECOND...the biggest issue here is who is at fault for not preparing an accurate HUD because now my buyers may not get this house because they will not be paying the 2010 taxes. SHOULDN'T THE TITLE COMPANY BE RESPONSIBLE BECAUSE THEY MADE AN ERROR BY OMITTING THIS EXPENSE???

Hi Alicia, The goal here is to get to closing correct? You are so far along here, WHO is at fault is irrelevent at this point...you need results. I would suggest they revise the HUD1 to reflect the taxes, and check with your state regulations. Here in Florida the taxes stay with the property even in foreclosure so if it were me I would send the revised HUD1, get a supervisor on the phone ASAP, remind them of this point and ask for a rework Now...if this is a bank/investor that requires a specific NET to close, then your buyer will may get a counter offer in the rework process-keep in mind that although this is at the end and after the approval has been issued, that this counter would have most likely come up anyways because they were lacking the information they needed to issue the counter during the negotiation process. If this property will appraise out and they still love the house, then I would encorage them to continue toward their home purchase goal and keep the focus off "fair" or "unfair". Mistakes happen and the reality is if the title company providing the preliminary HUD1's are doing just that then they wouldn't have performed all the lien and title searches if no one requested it until they were told to prepare for closing...in the future, these are GREAT questions to ask even before you show to get a feel for the experience of the negotiating team and follow up after contract with a request for the search results to keep informed and on task. I know locally, much of this the agents can look up on clerk of courts and tax roll as well so you may do your own searches and confirm your results with the listing agent/title company. While it may not be your "responsibility", it certainly sets you apart from the rest when you are the agent in the know. I will tell you that most of these situations work out when the parties are team players and hang in there for the long haul...good luck! :)

Replies

Keri Sweetland April 18, 2012 at 4:28am

Hi Alicia, The goal here is to get to closing correct? You are so far along here, WHO is at fault is irrelevent at this point...you need results. I would suggest they revise the HUD1 to reflect the taxes, and check with your state regulations. Here in Florida the taxes stay with the property even in foreclosure so if it were me I would send the revised HUD1, get a supervisor on the phone ASAP, remind them of this point and ask for a rework Now...if this is a bank/investor that requires a specific NET to close, then your buyer will may get a counter offer in the rework process-keep in mind that although this is at the end and after the approval has been issued, that this counter would have most likely come up anyways because they were lacking the information they needed to issue the counter during the negotiation process. If this property will appraise out and they still love the house, then I would encorage them to continue toward their home purchase goal and keep the focus off "fair" or "unfair". Mistakes happen and the reality is if the title company providing the preliminary HUD1's are doing just that then they wouldn't have performed all the lien and title searches if no one requested it until they were told to prepare for closing...in the future, these are GREAT questions to ask even before you show to get a feel for the experience of the negotiating team and follow up after contract with a request for the search results to keep informed and on task. I know locally, much of this the agents can look up on clerk of courts and tax roll as well so you may do your own searches and confirm your results with the listing agent/title company. While it may not be your "responsibility", it certainly sets you apart from the rest when you are the agent in the know. I will tell you that most of these situations work out when the parties are team players and hang in there for the long haul...good luck! :)
Jeff Payne April 18, 2012 at 1:49am

No the title company should not be responsible, the listing agent should have verified everything that was on the HUD, remember that the HUD is a preliminary HUD.

$12,000 in taxes, where is this property located?

This reply was deleted.