For almost everyone, the most important financial decision of their lives will be the purchase of their home. Just like all the important parts of our lives, insurance is a no brainer! Title insurance is a little bit different than health, auto, or homeowners insurance, however, as the premium is paid as a flat fee at the time of the transaction. Title insurance covers the total loan value of the home against various losses, like claims against the deed, ownership splits, easements, and property taxes.
These types of issues, while uncommon, are what title companies are for. They research the chain of title, ownership, surveys, and recordings to ensure that the sellers have complete and unquestionable authority to bestow ownership of the property. Title companies are very good at this, but there are various issues which can cause losses due to no fault of the title company itself. Wire fraud typically is what comes to mind first and is a terrible blight on the industry. Families have lost their entire life savings in the blink of an eye. What you might not expect though, is that the biggest loss annually by total losses, is misreported property taxes. This is where tax certificates come into play.
A tax certificate is a guaranteed and indemnified report of the current tax liability for the property. It gives additional information as well, such as owner information, a brief description of the property itself, and a list of all the jurisdictional entities that have the right to tax it. Additionally, it may include information about delinquent taxes or lawsuits filed against the property if such issues exist. These certificates are absolutely essential in every transaction, not only to ensure the property won’t be subject to seizure due to delinquent taxes, but also to calculate escrow and prorate closing settlements.
Historically, these certificates were ordered from the county courthouse and delivered after 1-2 weeks. You would simply call up the clerk and they would mail one out to your office. This process was quickly outgrown with the embrace of technology, and as lenders and sellers required faster closings. Plus, good luck getting an updated tax certificate 3 days before closing! Thus, the tax certificate company was born of necessity. Fast forward to today and the current face of the tax certificate industry. Tax vendors utilize numerous technologies to provide reports in less than an hour. Some vendors, like United Tax Services, even use Artificial Intelligence and dedicated parse programs to generate certificates, as well as HOA reports and Notice to Purchaser documents in just minutes.
Speed is great, but the real benefit is protecting the title company and the buyer. When the county sends a tax certificate and something goes wrong, the title company is fully responsible for all damages to the clients, not to mention their hard-earned reputation. Tax services, however, absorb this liability as part of their service offerings, guaranteeing the accuracy of their reports. United Tax Services even provides a guarantee against county database errors, something no other tax service can match. This reporting accuracy, speed, and protection allows title companies to worry about happy customers, and not delinquent taxes!