If while refinancing a real estate property you don’t check the taxes, you might be more in trouble than in good. Owners change, taxes remain, if unpaid.
Suppose you acquire a property with due taxes, you are acquiring the duty to pay them off or your rights are in danger. Tax authorities have all the rights to take over your property in such a case.
Solution to the problem is tax certificate, provided by title companies. A tax certificate is a detailed document of all the paid and unpaid taxes of the land. One must go through it thoroughly before closing.
Which taxes are we talking about?
Government and local authorities collect property funds, by various mediums. All the funds collectively are called property taxes. Every owner is liable to pay these taxes. If in any case they fail to pay, government holds the right to take legal action against the owner. To collect the de taxes, authorities put a lien on the property. These taxes are transferred to the next owner if property is bought AS IS.
How to be on the safer side?
Title companies are your protectors. Before you close the refinance, hire a service to run the title search and take the tax certificate. Your title company will go through the history of ownerships and other details to the minute to make sure that your investment is safe.
The report includes all the details of mortgages, deeds, liens, loans or any disputes, legal or hierarchal. The benefit of the report is that you can see all the unresolved issues and make them resolved if you are putting your money into the property.
Acquiring the report, you acquire peace of mind as you get on the safer side of the risk. Title search can be done on your own but it is suggested to find a reliable company. The nature of the job is delicate and demands expertise and high level of expertise.
Your job after receiving the report is to make sure that all the issues found were resolved before you go ahead for closing.
Safety on Safety.
Don’t just buy a title report, rather buy the title insurance and be double sure. Job is half done with the tax certificate and title search report as getting all the details only is not idiot proof.
Any mischance can still happen to your safety. Some inaccuracy can be found or untimeliness of the report can occur. If you are covered with Title Insurance, all such payments will be made by the company and not you.
In case you didn’t buy the insurance and still a problem occurs on your tax certificate, you can sue the previous owner legally for unpaid taxes. In case you lose, you might have to lose your property to the government.
Companies normally offer title insurance in a package where you have to pay a lump sum depending upon the type and location of your property.