Bulletin: GA2011004

Date:
October 10, 2011
To:
All Georgia Issuing Offices
RE:
Exceptions for Tax Pending Tax Appeals, Re-Assessment, Interest and/or Penalties

Dear Associates:  

         In Georgia, it is not uncommon for additional taxes to be imposed retroactively by taxing authorities performing re-assessments, making changes to tax maps or other amendments to the tax records. These additional amounts relate back and become a lien on real property on January 1st of the original tax period. For example, additional amounts for 2008 may be assessed by the taxing authority on June 15, 2010. The lien for these additional amounts would attach to all property of the taxpayer on January 1, 2008. Likewise, where taxes are under a pending tax appeal by the taxpayer, there may be a reassessment imposed upon resolution of the appeal, which becomes a lien on land in the original tax year under appeal.              

            Company Policy: The Company requires that all residential owner's policies and commercial owner's and loan policies contain a specific Schedule B Exception for these matters. The Exception should, in substance, provide as follows:

"Any additional taxes, interest and/or penalties which may be assessed for prior tax years by virtue of adjustment, re-appraisal, re-assessment, appeal or other amendment to the tax records of the city or county in which the subject property is located."

Please contact your local underwriter if you are asked to remove this exception for any loan or owner’s policy of title insurance which insures property located in this State.

         In addition, if the property is subject to re-assessment or a pending appeal at closing, the agent must fully disclose the fact to all parties and that there will be no coverage for this matter. The disclosure should be in writing and executed by the parties acknowledging these facts. The disclosure should be incorporated into the closing documents and provide, in substance, as follows:

"Seller and Purchaser acknowledge that the subject property currently is or, after closing, may be subject to re-assessment or pending appeal for property taxes by the City of ____________ and/or County of ___________, Georgia. Seller and Purchaser further acknowledge that the owner's policy of title insurance to be issued by Stewart Title Guaranty Company shall not provide insurance coverage for any additional taxes, interest and/or penalties for prior tax years by virtue of adjustment, re-appraisal, re-assessment, appeal or other amendment to the tax records of the city or county in which the subject property is located."

In a refinance transaction, the borrower should sign an indemnity that they will be responsible for any additional amounts that may become due.

Any pending appeal found during a tax examination should also be disclosed in the title commitment, as follows:

"The Company has information that the ___ taxes are under appeal for Tax Map No. _____________.  A possible lien for additional taxes for this tax year may become due and payable by reason of rebill, increased or amended assessment. The Company does not provide any insurance as to any amounts due and payable under this appeal."   

Exception should be taken for the tax year under appeal and any subsequent years.

Remember that it is risky practice to search the tax rolls yourself or perform your tax search on the tax commissioner’s website or rely on verbal reports of taxes or assessment or pending appeals from the Tax Commissioner’s office. Such research methods are unreliable and give rise to claims losses. Pending tax appeals and accurate tax information may only be found by a thorough examination of the tax digest in the Office of the Tax Commissioner in the county where the land is located. Accurate and complete tax maps may only be found in the Office of the Tax Assessor in the county where the land is located. The best practice is to order a tax report from a tax service in those counties where such service is available. 

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.  

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
GA000003 Policy Exception for Tax Re-Assessments, Interest and/or Penalties
Related Bulletins:
GA2008002 Requirements Relating to Unpaid Water and Solid Waste Charges in Georgia
 
GA2008003 Clearing Title from the Effect of a Tax Deed in Georgia
Underwriting Manual:
19.04 Taxes And Assessments
Exceptions Manual:
Taxes, Real Property
Forms:
None