My husband and I closed on our home 12/16/05. According to the Settlement Statement, the closing agency/title company was to pay the taxes with the money withheld from the Seller's proceeds for their pro-rated share from 1/1/05 to 12/15/05 and charged us our share of taxes from 12/16/05-01/01/06. The closing agency issued a check for the taxes on 12/21/05. In the meantime, the bank got a bill for taxes with our name and loan number, etc. on an unknown date, but before December 28th. I was told by the bank that it was odd that they got a tax bill that quickly and with our name and loan number, etc. from the county. The bank mailed payment for taxes from our escrow on 12/28/06 - resulting in a negative escrow balance of approximately $7,000. The bank told me that they had to mail them or they would be delinquent, but after calling the county, I was told that accounts do not start to accumulate penalties and late fees until January 31st. At some date unknown, the check issued for the county taxes by the closing agency was returned to the closing company and they then returned the money to the seller. It is not known why the check was returned. By the closing company sending the full amount withheld for taxes back to the seller, they also sent back some of our money - the taxes we paid from 12/16/05-01/01/06. I feel that the bank did not research this information enough to determine whether or not they were to pay the taxes and now the closing agency is trying to get the money back from the seller. Is there anything that I need to be doing? Is this something that is covered under FDIC or some agency that I can report this error to for both the bank and closing agency?
Real estate transactions involve a lot of people, a lot of paper and can be very confusing, and recommend that you stay on top of this. In the end, the taxes will be paid and either you as the owner or the title company if there is insurance, will end up doing so if the sellers are difficult about returning money that wasn't theirs.
You should have a time line agreed upon when either the bank or closing agency has decided enough is enough. At that point, if the funds are not returned, you'll need to decide if it is worth paying an attorney to help you. The attorney could demand the funds from the seller as they received "undue enrichment" (something for nothing) or from the closing agency who may decide returning the funds themselves is more cost effective than fighting it.
In any case, don't let this be put aside. As I said, the tax collector will be paid and you don't want the penalties or threats of a sale. If you opt not to use an attorney, ask the closing agency who regulates them. They may come under the Housing and Urban Development (HUD) federal agency, a state banking agency or state attorney general. If the closing agency isn't helpful, we'd recommend your first call be to the state attorney general. They can either assist you directly or refer you to the primary agency over the closer.
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Real estate transactions involve a lot of people, a lot of paper and can be very confusing, and recommend that you stay on top of this. In the end, the taxes will be paid and either you as the owner or the title company if there is insurance, will end up doing so if the sellers are difficult about returning money that wasn't theirs.