Legal Question in Real Estate Law in Maryland
Tax Lien/Real Estate
I bought my house from my mother two years ago. Recently, I sold the property and was forced to pay for a MD State tax lien from her & my father from back in the 80's. They said that the house was sold as a gift, no examination or consideration on the original title work (which makes no sense since I had a loan & a mortgage). I also found that title insurance was declined at the time of me purchasing the house from her (I don't remember being asked about title insurance???). So I had to pay off her lien $9,910 at settlement as the title company would proceed without the tax lien being paid off. This is not my income tax issue and why did I have to pay this?
1 Answer from Attorneys
Re: Tax Lien/Real Estate
When you acquire title to property, any liens that are recorded against the property pass on to you. This is why, in a conventional transaction where there is an institutional lender involved, the settlement attorney does a search of the title before the settlement. If you had a mortgage from such a lender (as opposed to from, say, your mother), this should have been done, and the tax lien would have been revealed. Your lender would have insisted that the tax lien be paid off at settlement.
If the settlement company was supposed to do a title search (if they did so, it would show up as a charge on the second page of your settlement statement in the "1100" section), they were negligent in not discovering this lien, and you should write them a letter demanding reimbursement for this lien. Of course, your mother is also responsible, and she should reimburse you in the first instance, because if the title company were to do so, they would have a right to reimbursement from her.
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