19.04 Taxes And Assessments


In General

General real estate taxes are those taxes levied against the property as provided in the state constitution or under the general authority of the state statutes.

These regulatory tax provisions must be carefully examined in order to ascertain and fully understand the tax structure of any particular jurisdiction and to determine the time in which any general or special tax becomes a lien on real property.

Taxes, general or special, are levied by various different bodies, such as states, counties, cities, towns, villages, school districts, etc., depending on the jurisdiction, nature and form of the tax.

Tax records are usually maintained by the collections entities authorized by law in each jurisdiction.


Special Assessments

“Special Assessments” are special taxes imposed on real property by the taxing authorities for the purpose of paying for improvements which directly benefit the property. These improvements may be street pavings, sewer lines, sidewalks, drainage installations, etc.. Statutes usually provide that the special assessments shall be liens on the properties to be benefited. These liens may attach at the commencement of construction of the improvement, at an earlier or later time, as designated by the statute.

Quite a diversity of assessments of one kind or another are encountered in the various jurisdictions. It is important, therefore, to acquire a familiarity with the various kinds of assessments encountered locally, to know which of these is considered an assessment appearing on a public record, and therefore, required to be shown as an exception in the policy and to know when such assessment becomes a lien.

Some of these assessments are payable in installments. In such cases, it will be necessary to show the assessment and indicate which of the installments has been paid and which of the installments remains due and unpaid. Future installments, although not yet due, will usually become a lien and must therefore be shown.

In this connection, it is also especially important to remember:

·  That although the assessment may be payable in installments, the statutes usually provide that the lien shall be for the full amount assessed against the property, which includes future installments not yet due and payable.

·  That a property may be considered as benefited, and, therefore, subject to assessment by improvements in streets other than that upon which the property abuts.

·  That assessments can be the source of substantial losses and reliance should not be made upon verbal reports of tax or assessments offices as to the existence or nonexistence of special assessments.

·  That the absence of notice of record relative to the existence of the assessment may not be conclusive of the nonexistence of a lien at the date of the policy.


Tax Rolls Description

In many localities, it is not uncommon for the tax rolls to contain indefinite, imprecise, and many times, ever erroneous or defective legal descriptions, and because historically taxes have represented one of the major areas of losses for the title insurance underwriters, it is extremely necessary to exercise the utmost care when examining the manner in which the tax rolls reflect or describe the properties to be insured.

This is an area where nothing should be assumed or presupposed.


Tax Rolls Examination

  These guidelines are to be followed when examining a tax roll legal description. The affirmative answer to any of the following situations may make it necessary either to make an additional title requirement or raise an appropriate exception in the title commitment policy:


  ·   Is the tax roll description so vague and indefinite that the property to be insured cannot be properly and certainly identified?


  ·   Has the property to be insured not been assessed?


  ·   Has a portion of the property to be insured not been assessed?


  ·   Has a portion of the property to be insured been assessed in conjunction with an adjoining property?


  ·   If a portion of the property to be insured is accreted land, do tax rolls omit the description of the same?


  ·   If a portion of the property to be insured is part of a vacated street, road, or abandoned railroad right-of-way, do tax rolls omit describing the same?


  ·   Is the property to be insured within a benefit district for which no assessments have been levied?


  ·   Is the property to be insured exempted from taxation but tax rolls do not show it as “exempt”?


  ·   Does local law require the taxation of a leasehold estate?


  ·   Is the property to be insured railroad property?


  ·   Are the taxes by the property to be insured being paid by any other but the record owner?

See also Texas Bulletin TX2015007 Relating to Vacant Land and Commercial Property in Travis County Texas. 


Tax Exempt Status

Premises that are tax exempt should be so marked on the tax books if reliance is to be placed on such exemption. Prior underpaid taxes should not be ignored or reliance of the present tax exempt status of the premises.

Similarly, consideration must be given to the possible loss or change of the tax exempt status of the premises as a direct result of the execution of the transaction that is being insured. In this respect, and if pertinent, it may be necessary to take exception as to the current year’s taxes.