QUESTION: I have just signed a contract to purchase a house in the District of Columbia, and we want to settle shortly. We already have lined up our financing, and both seller and purchaser are anxious to complete the transaction. When we called our settlement attorney, however, we were informed that we probably could not settle for at least a month because of some new D.C. regulation with regard to obtaining real estate tax information. Is this correct, and must we wait a month to get information from the District of Columbia?
ANSWER: It seems that we always are waiting for information from the District of Columbia. While the current Recorder of Deeds has done a superb job in expediting the recording of legal documents such as deeds and deeds of trust, other branches of that same government are not as responsive.
For example, in the District and in Maryland, a water bill is a lien on property. In Maryland, you can get a final water bill from the Washington Suburban Sanitary Commission within a week or two. In the District of Columbia, however, it often takes several months to get a bill -- although in fairness, it took years under previous administrations.
Now, it appears that the District, in an effort to clean up its act, may have created yet another snafu. When you sell your house, your purchaser wants to know that you have paid all of your real estate property taxes. Because those taxes are also a lien on the property, the purchaser needs assurance that the tax payments are current. In an April 7 letter sent to all title companies, Jeffrey L. Humber Jr., acting director of the Department of Finance and Revenue, announced that effective April 15, the District will provide information by telephone regarding the status of the real estate property tax only to owners of property. He said that title lawyers and title companies who do settlements now must request the tax-status information in writing "at least one month in advance of the settlement date."
It used to be that anyone could call the District of Columbia government to request this information. Although it often was difficult to get through the telephone switchboard, the information was available so that the settlement companies and the attorneys could go to settlement without delay.
Humber explained that the District is "undertaking an enormous project to clean up all backlogs, post all payment information to the correct ledgers, and upgrade the computer information system."
Furthermore, according to Humber, "Our goal is to eliminate all tax certificate backlogs by the end of June. When these backlogs are eliminated, we are prepared to promise a four-week turnaround time for tax certificates. At the end of the entire reconciliation project, a two-week turnaround period for tax certificates seems feasible."
However, until the District completes its task, consumers in the District of Columbia may be forced to wait a minimum of four weeks before they can go to settlement.
In many instances, people know their settlement date well in advance of the actual date. Presumably, they can ask their settlement attorney or title company to request the tax certificate ahead of time -- and then hope and pray that the District will respond. I have talked to many providers of settlement services who indicate that the District is three to four months behind on returning the requested tax certificate.
But those consumers who cannot anticipate a settlement date in advance appear unfortunately to be caught in the typical bureaucracy.
I called Humber to discuss this new policy, and he explained that more than a million records have to be cleaned up, going back at least to 1978. According to Humber, "There are at least 200,000 properties in the District of Columbia, and if you multiply that times a number of years, you can see that this is a complicated process." He indicated that the District is trying to be cooperative, and, in fact, has hired additional people to clean up the backlog. The District intends to open new taxpayer assistance office; where a competent staff person will be able to discuss -- in private -- the status of a particular tax problem.
Humber was optimistic that the situation may be cleaned up by the end of this year. However, he indicated, that his staffers could not attack the backlog if they were continuously busy handling requests from title companies and attorneys for real estate settlement tax information. Accordingly, the District has taken the "hard-line position" that all of these requests must be in writing, and at least one month before the date of settlement.
However, Humber did suggest that they are "willing to be flexible, but are pleading with the providers of settlement services to help the District out in this matter."
Humber stated that, in an emergency, the District would be willing to cooperate."We certainly don't want to cause additional hardships to our taxpayers," said Humber.
However, Humber urged that the real estate industry "save the emergencies for true emergencies and don't abuse the situation."