November 2008 Vol. 1, No. 6

Claims Corner

Taxes

Preventing Tax Claims

ATG receives several different types of tax claims with relative frequency. Most of them are preventable.

The first type is caused at closing when unpaid taxes are waived based on information from a treasurer's office. If the initial search shows taxes as open but the taxes were paid before the closing, the taxes should not be waived without further investigation. This is especially important if the taxes were paid after the date the taxes were due. A treasurer's office will consider real estate taxes as paid if they are sold. This is because the treasurer has been paid and the money is now owed to the tax purchaser. For example, the Cook County Treasurer's website will show taxes as paid if they have been sold or if they have been added to a previous year's tax sale.

To prevent these claims, examine taxes paid after their due date closely, especially prior taxes paid around the time of the tax sale. Proof of payment in the form of a receipt or a cashed check with bank information on the back is sufficient to waive the taxes. If there is a question as to who paid the taxes, please doublecheck the taxes.

The second type is caused by typographical errors. It is important to doublecheck the property index number (PIN) on the commitment and the policy. Transposing one number in a PIN can cause the insured lender or owner to pay taxes on the wrong property, leaving the taxes on the correct PIN unpaid. ATG is typically notified of these claims when the taxes on the correct PIN have been sold. Further, it is difficult to obtain a refund from the treasurer for taxes paid on an incorrect PIN.

The third type is caused when a tax payment is made for less than the full amount due. This typically arises when taxes are past due and the money paid for the taxes does not include all of the applicable interest. Treasurer offices apply money received to interest first. If a payment does not include the outstanding interest, a portion of the base amount of the taxes remains open. If you have questions regarding the amount due, please contact the ATG Escrow Department, 312.752.1986.

Contact the ATG Underwriting Department, 217.403.0020, or 312.752.1990, with questions.

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