query via email concerning a pending tax sale and a title insurance claim

Hello Diane,
My name is Gerald and I noticed your Blog re: Title Ins. said to email you with questions and  . . . .  ok here goes - 
100% DISABLED Person living on fixed - (lower income) 

1) My First time for a Title insurance claim - I have NO IDEA what to expect or ask for - ? My home is paid for but am facing Tax default / Tax Sale March 20, 2012. I paid 85,000 in 2005 for a cabin on one acre in So CAL. The assessor had me WAY overassessed (from 2004- 40,000 up to 125,000. in 2006 - isn't that illegal %? ) just got it down to 92 then 70 for last year and now33,000 for 2010 - all these changes just this year and now they insist it all be paid(with 18% interest!!) IMMEDIATELY or be FORCE-ABLY REMOVED by the County Sheriff! They are treating me like a squatter!? - I PAID CASH! My entire life savings invested here in this humble abode.

2) I have never received a formal title to the property because the description was wrong that was entered when it changed ownership, (due to clerical error?) and numerous attempts to get to the Escrow company [redacted] . . . . finds they went outta biz! . .. thus I placed a title insurance claim with First American recently. - it is supposedly in process - waiting for their investigation . . .. they say expect a month? - for what ? criminy 10 minutes of explanation and I can sleep again without having looky loos rooting thru my backyard hoping to buy the place for a sweet 9 grand. Is this an appropriate Title insurance claim? What kind of numbers should I expect them to pay - medical also?, Every Attorney I speak to loses it after the second paragraph.

I have always fully intended to take advantage of a State program for postponement, (it was a check box on the original sales offer form - replacement of disabled home) - but, as you might be aware - the taxes had to be paid up before the CA state deferrment program would letme apply . ..  now the state cancelled the program for Elderly and disabled prop tax deferment - http://www.sco.ca.gov/ardtax_prop_tax_postponement.html

so it was a catch 22 -  I do owe taxes but the amount is higher than I think it should be because of the incorrect info: (ie: Cabin w/o bath VS. 1 bed 3/4 bath still incorrectly listed) I don't feel rightabout paying another cent for taxes till I get a real title - ?  The County will not take the "title in lieu" - nor accept the recent postponement Legislation AB1090 that I was praying would save me.

The Tax Collector INSISTS on $9,143.00 on or before March 20, 2012 or they are throwing my disabled ass on the street - ! I don't have credit to borrow it and they won't take payments. HUD EDA FHA  no one can assist  - DisabiltyrightsCA.org tells me it's way out of their field. My health is now becoming critically endangered - multiple heart attacks.
- Any thoughts? Is there a way to expedite correcting this kind of Title Insurance Claim without going to court for several years?  I simply do not have the life left in me. AAARRRGGHHH!

-at wits end and losing my grip,
appreciatively yours,

Gerald

Happy Holidays

Hi, Gerald:  Wow.  Thanks for sending the email.  I don't really have a solution to offer you but I think I may be able to add clarity which may assist an attorney to better understand and perhaps offer more helpful advice, okay?

Let's talk about title insurance.  There are a couple of details in your described situation which cause me to believe you may not have a successful claim. Don't let that stop you from trying, and I would welcome comments from other title insurance professionals who may have a differing opinion.

The coverage for title insurance goes backwards from the date of the policy.  Claims are based on losses that happen because of things that took place before the policy was issued.  So, look at Schedule B in the owner policy.  This is where exceptions to coverage are listed.  I would be surprised if you do not see an exception for property taxes which are not yet due and payable. That means your title insurer would not even think about covering taxes that were billed after your purchase in 2005.  This would include tax bills, if any, issued retroactively for prior years.  Again, the key phrase is not yet due and payable.  We cannot be expected to discover and insure tax bills that don't yet exist when issuing coverage.

If, however, any of the outstanding taxes moving you to this tax sale were due and payable PRIOR to your purchase and the title insurance agency failed to find them and have them paid, those would be taxes typically covered in a title insurance claim.  The way to nail this part of your concern with an attorney is to look carefully at Schedule B in your owner policy. and compare exceptions for taxes with the original due dates for tax bills you have outstanding.

The other matter you raise that is an incorrect description.  The only detail you mention, though, is a difference in the dwelling - Cabin w/o bath VS. 1 bed 3/4 bath.  Go back to your title insurance policy and locate the legal description of the insured property.  This is usually on Schedule A but it may be on Schedule C.

I would be very surprised if the legal description in your policy includes any reference to the type of dwelling.  I say this because title insurance is about insuring land ownership.  The fact that a dwelling or some other structure sits on the land impacts value and therefore the amount of coverage but we don't insure what that dwelling is or its condition.  You establish the value by telling the title insurer what you agreed to pay for the property.  You bought an owner policy in the amount of $85,000.  Your ownership of the land described in the legal description is insured up to $85,000.  If the title insurance agent DID include a detailed description of the dwelling, then you may have a claim, but again, I would be surprised to see any reference to a structure in the description.  The way to nail this part of your concern with an attorney is to look carefully at Schedule A or C - find the legal description - and see if there is an affirmative statement of the type of dwelling.

I don't think the one month estimate of time for claim review with First American is unreasonable.  The onus is on the consumer to make a timely claim and to notify their title insurer as soon as they have a potential claim so that there is a chance of defending you successfully and mitigating damages.

I hope this clarity does help in your discussions with an attorney.  If your review indicates no hope for a successful claim, then that may clear the air for a discussion with an agency for the disabled to simply concentrate on helping you relocate or find some emergency loan assistance.

I wish you well.  

Diane