Let’s say that you purchased a property six years ago from a son who inherited commercial farmland from his mother upon her passing. The son lived in a different state and wanted to move the sales process along quickly and had limited information about the property. Both the buyer and seller had a vested interest in processing the sale quickly, and both were happy come closing day.
Flash forward to today, and you get a letter in the mail from the government saying that the property is being foreclosed upon. How can this be? You’ve paid your mortgage every month and paid your property taxes in a timely manner each year. Well, an audit of the property revealed that the original owner of the property (the mother) failed to pay property taxes for the last two years she was alive. This detail was missed during the sales process, and only now has the government uncovered that there is still an existing tax lien on the property.
Do you try to contact the son and explain the situation, hoping he covers the tax bill that his late mother owed? This is likely to be a fruitless effort, as the son is under no obligation to pay those taxes now that he no longer owns the property. Although you are not the one who incurred these expenses, you would now be on the hook for settling these property taxes because you hold the title. It sounds unfair and even a bit unrealistic, but old tax liens are discovered all the time, and if you aren’t prepared for this potential scenario, it may become your problem to solve.
However, you can have peace of mind knowing that you never have to worry about an unpaid tax bill if you purchase an owner’s title insurance policy.
Commercial Partners Title
Are you in need of title insurance underwriting services for your next commercial real estate transaction? If the answer is yes, you’ve come to the right place. Commercial Partners Title is your go-to expert in the world of title insurance. Our team is comprised of title underwriters, escrow agents, title searchers, and more. We work together with each of our clients to provide personalized, detail-oriented services. Let us guide you through the specific details of your next commercial transaction. Reach out to our team of experts today at our Minneapolis offices.