Tax Foreclosure Related Service
In 1999 a new act was passed (1999 Public Act 123) to foreclose properties for nonpayment of real property taxes. Under the old act, properties were often purchased from the Department of Natural Resources or a local government. The new act may be administered by the State but in the tri-county area, is usually administered by the County in which the property is located. Generally, the properties affected by the new act have been purchased at a County Auction in 2002 or later.

For properties purchased at a county auction following a tax foreclosure, obtaining title insurance has been problematic. Because the act is relatively untested in the Michigan and federal courts, title insurance underwriters have been reluctant to insure properties that have gone through the process. Some underwriters have agreed to insure these properties-but only upon receipt of a certification from an outside company, Tax Title Services, who has agreed to accept the risk of loss that might arise as a result of a defect arising from the new act. LaMont Title Corporation has been working with these underwriters and the outside company to facilitate these insurance policies. LaMont creates the title commitment upon which the outside company bases its research and ultimately issues the title insurance upon receipt of the Certificate from Tax Title Services.

Unfortunately, the cost of this outsourcing is high and is in addition to the standard underwriting premiums charged for the policy of title insurance. The process begins with a non-refundable payment of $450 during which a due diligence will be conducted by Tax Title Services and LaMont Title. This can be ordered through LaMont Title who will prepare a title insurance commitment and tender it to the company who will conduct a search of the notices sent to the various parties having an interest in the land. If Tax Title Services declines to issue a Certificate, the purchaser will be notified by LaMont Title and the file closed without insurance. If Tax Title Services accepts the risk, an additional fee is required and a title commitment will issue. This remaining fee goes entirely to Tax Title Services with no portion retained by the underwriter or LaMont Title. The fee for properties to be insured at more than $25,000 is $2,500 which includes the initial $450 paid upon application. If the amount of insurance will be less than $25,000, the fee is based on a graduated scale which includes the initial $450 paid upon application. Once title insurance is ordered, the usual premiums will be charged in accordance with the rates filed with the state by the pertinent underwriter.