In 2006 we insured a transaction for property which sat in two different municipalities. The house and most of the land was in one and the back 50 feet of land was in another.
I received a letter last week from the grandfather of the insured stating that we had failed to clear title on the 50 feet and that we had better pay roughly $700 to resolve the matter and that his granddaughter ought not to have to wait for the title company.
Anytime a potential claim is raised I always contact the parties immediately and review the file. I called the gentleman who wrote the letter and left a message then I immediately drafted a letter to our insured with a copy to her grandfather including a copy of her owner policy, instructions for filing a claim and asked that she contact me with some clarification of what they meant by failed to clear title. I had reviewed the file and there wasn't anything that stuck out as a problem but I did notice that the abstract had been performed by the underwriter.
Well, the grandfather called me a day or two later and said that prior to sending me the letter he had filed a claim on behalf of his granddaughter and that he had paid the roughly $700 to the county to buy back the 50 feet in the rear of the insured parcel. He said we had failed to clear taxes on that parcel and that the county had taken it in a tax sale.
Huh? Well, that raised three issues in my mind.
First, there wasn't anything pressing for me to do because he had already paid the county and filed a claim so the matter was in the hands of the title company attorneys. The next step will be a request from the title company for our file information so they can process the claim. I expect I'll receive that soon.
Second, in my fast review of the file I only saw one tax number on the cover sheet. We have a system in place to quadruple check tax numbers and so if a file moves through that system with an undiscovered tax parcel, it's because someone was asleep at the wheel. That someone could be the seller or a real estate agent or the abstractor or someone in my office, maybe even me. It would take more thorough review of the file to determine what may have happened and I know that review will take place as the claim is being processed.
Third, if taxes aren't being paid on a parcel the tax collector and the tax claim bureau send out notices. Prior to a tax sale taking place, the property is posted and advertised and the vested owner is notified by certified mail. Our insured, the granddaughter, had to have ignored all of these notices. We insured a conveyance in 2006. This is a claim in 2010. I wonder what tax years were delinquent and the basis of the tax sale?
It will be interesting to see how this works out in the end. I'll share the findings when available.