Gingers Lack Of Service Follow Up Q&A Mortgage Foundby James Mikel
Hi again, James, The property I purchased at tax deed auction definitely has a 175K mortgage attached to it. The mortgage did not show up on the county's title search so the bank was not notified of the tax deed auction. I don't know how the title company working for the tax assessor could miss the mortgage on this property. It was quite easy to find with a search on the owner's name. Anyway, I'm worried about losing my money. What do you think will happen? FYI I did call the tax assessor's office and they are looking into the mistake on the tax deed title search. Thanks for all your help, Ginger MY RESPONSE Ginger, a major fumble. I doubt that you will lose your money. This is what happened to me. I purchased a tax deed in Citrus County and 3 days prior to the tax deed sale the property was sold for $5,000 via quit claim deed to a man in Miami. I had completed my due diligence for the auction properties about a week prior to the auction. I named the individual as a defendant in the quiet title action as I always conduct a new title search before drafting my quiet title action motions. He was quite unhappy to find that I owned the tax deed as the property was worth $45,000. He sent in his written defense and contacted the Clerk's office. The Clerk's office contacted me and urged me to return the tax deed to them and they would reimburse my money. I refused and forged ahead with my case. The individual then appeared at the court hearing and the judge granted a 30 day continuance for the man to obtain proper counsel and he was to record a motion for Elongation. He did not record the motion, I requested a second hearing date and he did not respond or show up. The case was adjudged in my favor and I sold the property with title insurance. I assume the mortgage existed prior to the generation of the Counties Certification and the Owner's & Encumbrance report. Since you have alerted them as to the problem the Clerk's office will contact the counties legal department for guidance. In all likelihood the county will elect to return your funds unless there has been a payout of the funds to parties of interest throught the Clerk's registry. I assume the property was not homestead exempt since you had mentioned there were renters in the property. Not being exempt is a good thing for you as you would have had to post 50% of the properties value and the owner would have claimed it by now. This would have made it more difficult for the Clerk's office to recapture your funds. Showing a large deficit, even in the short term, in the Clerk's registry leads to review by counsel. Another point-The title company who prepared the Owner's & Encumbrance Report has Errors and Omissions Insurance to cover them in the event of such a mistake. So, if the county elects to return your funds they will be reimbursed by the title company for errors made. I would contact the title company and ask what their protocal is in such a situation-just so they know you are aware and to have contact with them. The title company will also have a title underwriter who may offer assistance as I would inform them of the fact that you are unaware of the next step to take as this is such a rare occurance. This should also feed the fire as the title companies E&O insurance rate goes up with each claim made so they will be more inclined to assist you rather than to ignore. O.K. so let's assume the county does not offer return of funds . I'm in uncharted waters here but I'll give you my best bet. I would name the lender as defendant in quiet title action and hope they do not respond. If they do respond they can have the tax deed overturned due to lack of service. If voided and unreimbursed by county, I would file a claim against the title companies E&O for your loss as the loss is directly due to their mistake, and that's what E&O is for. Yes, tax deeds are purchased buyer beware but the county has a responsibility to ensure proper notification has been made to parties of interest and part of that system of checks and balances is to rely on an independant title company. If the lender does not respond to notice of hearing carry on with the quiet title action and once adjudged in favor of Plaintiff you are good to go. Since the amount paid for the property is more than a few thousand bucks the attorney for E&O will likely tell you that your claim is without merit as the auction was buyer beware. You can combat that with book and page number of mortgage recorded along with date of Owners and Encumbrance and Certification date made by county. The county certifies the correctness of the report based on facts brought forward by the title company. If the title researcher fails to provide adequate and complete disclosure of all known parties of interest the title company also bears the fault of loss. If you hire an attorney you may also be able to collect on your costs for the quiet title action, opportunity lost costs i.e. tying up your money for x months denying you further income derived from it, injunctive relief, etc. etc. but I have never been down that road and I'm not an attorney. I hope this helps, please keep me posted as to your progress. This is very interesting stuff. I will be posting this to the site to see if others have a different answer than my own as I have a very intuitive audience as attorneys, title agents and senior level investors have purchased my investment guuides. ------------------------------------------ ANYONE HAVE A DIFFERENT OPINION?
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