Marina Del Rey, CA asked in Real Estate Law for Maryland

Q: In Real Estate law, is the Settlement Company liable for damages as a result of recording errors?

The Settlement Company at closing for an investment property erroneously recorded the owner's residential mailing address with the Department of Assessments and Taxation. All correspondence mailed to the owner was undeliverable and returned to the sender with no forwarding. Notices of property tax bills, default, and eventual tax sale were recently confirmed by the county treasurer as returned mail. I am the owner and my property had to be redeemed from a Tax Sale auction.

Can I hold the settlement company liable for the cost of redemption? The total in fees and interest accrued to $3,000.

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2 Lawyer Answers
Daniel Staeven
Daniel Staeven
Answered
  • Annapolis, MD
  • Licensed in Maryland

A: You may have a claim that is actionable. The problem, however, is that you may not be able to prove your case without investing substantially more than you lost for attorneys fees, court costs, discovery costs, and associated other costs.

I suggest going to the settlement company directly and finding out what happened in your case. You may be able to ask for a refund to cover some of your costs. The costs for litigating would be substantial compared to the loss and a reasonable owner of the settlement company might be able to come up with a settlement that mitigates some or all of your loss.

Good luck in this endeavor.

Mark Oakley
Mark Oakley
Answered
  • Rockville, MD
  • Licensed in Maryland

A: File a small claims action in District Court (any claim under $5,000 is small claims), attach to the compaint a copy of the recorded document containing the address error, a copy of the closing document that should have been relied upon showing the correct address, and a copy of each tax bill and notice of tax sale to the wrong address that resulted in the tax sale, plus the tax sale document and proof of cost to you to redeem the property. Or, before filing the action, prepare the entire suit and send a copy attached to a letter mailed to the tile company, demanding payment of the amount of your out-of-pocket costs incurred to correct and remedy their error, and state you will file suit by some deadline if they do not pay. Send a copy to your title insurance company (yes, you have title insurance, it was purchased at time of closing) and see if they will cover this error, and comb through the policy to see if there is coverage provisions for post-closing recording errors. If so, and they refuse to reimburse you, add them to the suit complaint under a separate breach of contract claim. You have both breach of contract and negligence claims against the title company. The title company should also have errors and omissions or general buisness liability coverage for negligence.

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