Problem with Builder/Title Company

Hello All,

I close on a house last October. And everything was fine until last Saturday. I received a letter from my lender that the money that received from Escrow was not enough to cover the property taxes. Of course during closing I had to pay for taxes & insurance for the last 2 to 3 months. However, it seems the builder hadn’t put the necessary funds in escrow to cover the taxes from January to September. The title company was Stewart Title, which was the builder (Plantation Homes) preferred title company.

The current lender wants to add $300 to my monthly mortgage. My question is what recourse do I have to get the builder to pay the taxes? I noticed on the HUD-1 sheet that the taxes was under the column “Adjustments for items unpaid by seller”. This was my first closing so I probably should have brought an attorney. The funny thing was the secretary was asked by the closing agent did I come alone, which I thought was weird.

I going to call the title company tomorrow but I wanted to know if you all had any experiences/opinions on this subject.

Thanks in advance.

sounds like a title company error. The taxes should have been paid at closing for the year. What state and county are you in?

Call the title company and be nice although you wont want to be… If they made a mistake they will correct it…

These things happen and is why you buy title insurance…

Good Luck

Michael Quarles

Hello Michael and Christopher,

Thanks for your responses.

I’m in Texas, Collin county.

Hopefully, this will get resolve tomorrow with the title company

Title companies can let you buy lists. I think Stewart and Austin Title offered, but they’re not free.

Title company did nothing wrong. Problem is realtors are not into the financial aspect of a loan so do not disclose how property taxes work, Mortgage brokers generally stay quiet and since they may not be local, they do not kn ow how taxes are in your county and state.

When you closed in Oct 07 your taxes to be escrowed are calculated based on the current tax bill. Since you have a preconstruction home, taxes are dirt cheap, no home there, just dirt. Now your home is completed and the land is being reassessed. In most of TX, taxes are based on about 2.7-3.0% of the purchase price. SO if your taxes are going up $300 a month, I assume you bought a home around $125K range. No one has to tell you what the taxes will be. it is not a form of disclosure since the county needs to reassess the home after it is purchased and before the new tax bill comes out.

Its a shame, because this is one of the things driving people into foreclosure as well.
My state Fl, is horrible because longer you own a primary, lower the taxes are. IN may 06 I bought a home for 505K. Owner lived there for 20yrs and taxes were 1800. So in Nov 2006 I get a bill based on there tax rate $1800.In Nov 2007 it jumped to 1.5% which was $8,000. Big jump in the tax bill… Over 500 a month more.

andrew