Taxes on the Listing show $5,500.00, the Buyer takes possession and receives a bill from the municipality for $7,000.00. What can be done?
Actually, this happens quite frequently. The annual taxes are $5,500.00 but the outstanding taxes are $7,000.00. If the Purchaser obtained Title Insurance on closing rather than a Legal Opinion, then the lawyer didn’t check for outstanding taxes with the Municipality. This search wasn’t done. It costs $30.00, but this step was skipped because of the Title Insurance Policy.
The Seller still has to pay the properly adjusted amount specified on closing. If the $7,000.00 was disclosed, then the Buyer already received credit for this on closing. If it wasn’t disclosed to the Seller’s lawyer prior to closing, it wasn’t in the Statement of Adjustments, and the Buyer is entitled to reimbursement.
Assuming that the Seller has left the country and cannot be located, then the Title Insurance Company will cover it. Remember that one of their marketing tools in the first place was “save $30.00 for the tax arrears Certificate and put the savings towards the Policy”.
Brian Madigan LL.B., Broker