Question on property taxes at closing
Our house finally sold after nearly a year on the market. The closing was Tuesday and we did very well, tripling what we orginally paid for the house over 20 yrs ago. But here's the question for those of you experienced with closings: Over the year the house was for sale, we paid off the original mortgage, not realizing that the lender had only escrowed and paid taxes through 2009, but not for 2010, since the mortgage was paid in full in January 2011 and we pay taxes in arrears here. After the mortgage was released by the lender, we got a huge refund back for our overpaid tax escrow account, but it didn't dawn on us until yesterday (the day after the closing), when we looked at the Auditor's website for the property that our 2010 taxes were still outstanding and unpaid. Now the settlement statement does reflect that 2011 taxes from Jan. 1 through Sept 27 were deducted from our check, but nothing for 2010, which is what I expected to see. Obviously, the title company whp prepared the paperwork and conducted the closing completely missed the 2010 taxes being outstanding and delinquent and I assume the deed cannot be transferred to the new owners until the taxes are paid. We have no problem doing the right thing and paying the 2010 taxes, but shouldn't the title company bear some responsibility for not catching this glaring error when they researched the property for liens and encumberances to the deed? They were paid to do a title search and they obviously missed a big thing that might cause a problem both for the buyers and for us.
We called our real estate agent last night when we discovered the problem and are waiting to hear back, but I'd like the opinions of those of you who are experienced in this kind of issue. BTW....initially, even our own agent was convinced that we were ok and that just deducting the 2011 taxes through the closing date was correct...UNTIL we made her look at the Auditor's website and see that our 2010 taxes were still outstanding. She was shocked that this was missed.