Travola Foster and her fiance searched for months for their first home, a difficult enough task even without a pandemic and competitive housing market. They were outbid a couple of times and nearly gave up.
But then, Foster got an alert about a home in Ashburton, close to where she works and spacious enough for her household of five. She quickly arranged to see it, and soon her real estate agent knew he had a sale on his hands.
“When everybody starts assigning rooms,” Jack Mager said, “that’s usually a good sign.”
The couple bid $425,000, about $25,000 above the asking price, and settled on Jan. 19.
“Everything was perfect,” said Foster, 38, the office manager for an electrical contractor.
But as she, Brian Carlos Plattenburg, 39 and a construction foreman, and their three children settled in, little did they know the financial ground was shifting beneath them.
A reassessment of their home’s value shortly after they bought it more than doubled their property taxes, adding hundreds of dollars to their monthly mortgage payment. But due to pandemic-related delays in recording real estate transfers, they had no idea until about 1½ months ago because the notification went to the previous owner.
“I went through a lot to save up and put my family in a nice house,” Foster said. “This is my first house, and now I might lose it.”
‘How did this happen?’
Their annual property taxes rose to more than $9,500 starting July 1, from about $4,000 the prior year. That created a shortfall in their escrow account, from which taxes, insurance and other fees are paid, prompting their bank to increase the monthly mortgage payment by almost $970 starting this month. After some desperate communications, the bank agreed to spread the increase over a longer period, meaning the monthly payment went up by a smaller amount — about $600 — to almost $3,200.
“HOW DID THIS HAPPEN?” Foster asked in an August email to the title company and two Baltimore City government addresses.
Foster said for October, they paid the previous amount, about $2,600, as they seek an adjustment. But she acknowledged they’ll have to pay what they’re charged to avoid defaulting and damaging their credit score.
She’s angry no one alerted her that property taxes could rise so quickly and dramatically, and that delays by their title company and the city left them unaware for months their mortgage payment would jump hundreds of dollars.
“We never would have signed the papers,” Foster said.
The problems have soured the experience of their new home.
Foster and Plattenburg’s three-story, six-bedroom home still has a fresh, new-house look to it. It has a north-facing, airy sunroom; lots of space for the children (ranging in age from 15 to 3); a little home theater; an exercise room; and storage for the haul of supplies from her couponing hobby.
The family in many ways fell victim to bad timing and delays everyone experienced. Some are due to the pandemic, which sent workers home, closed courthouses and other offices involved in the property recording process, and continued to leave them short-staffed after they reopened.
According to the Baltimore City Finance Department, its part of the process, which in the past could take a week or less, has about a 10-week backlog.
The delays in the city are “like nothing I’ve ever experienced,” said Marc Meisler, a real estate attorney with more than 25 years experience who manages Tower Title in Laurel.
Meisler submitted documents in June that are still making their way through the system. He’s had documents returned because of an error that took the city months to detect, requiring him to start from the beginning.
“The clock starts all over again,” he said. “You go to the back of the line.”
A record-breaking housing market added to the workload, industry insiders said.
Generally, recording delays have little impact on homeowners, said Dee Dee Miller, president of the Maryland Realtors trade group. Once seller and buyer arrive at a settlement date, ownership transfers in actuality, if not in the state’s official land records.
“When the deed is signed at closing,” she said, “the new owner is the new owner.”
Renovation and reassessment
In Foster and Plattenburg’s case, the greater problem was a reassessment of their home’s value, leading to a spike in property taxes. The home had been renovated extensively before going on the market, although when they bought it, the tax value still was listed as $188,000.
All renovations in excess of $100,000 trigger a reassessment by the State Department of Assessments, said Dan Phillips, supervisor of the SDAT real property division.
When SDAT inspected the property in December, the work was not yet completed, so the house’s new value couldn’t be determined in time for the Jan. 1 batch of adjustments, he said.
SDAT eventually set the house’s value to rise in two phases, to about $405,000 as of July 1 and to more than $410,000 a year later. Notification went out with the April 1 adjustments, Phillips said.
But because the process of recording the home’s sale was unfinished, the previous owner was notified instead of Foster and Plattenburg.
‘Delays can occur’
The first the couple learned of the increase was in August, when their mortgage lender notified them that their monthly payments would rise because of an escrow shortfall.
Foster said as she started calling and emailing, she learned she and her fiance weren’t listed yet as the owners, seven months after they bought the house.
The delays began with their title company. Title Forward did not order a lien certificate from the city until May 20, four months after the settlement date, Finance Department officials told The Baltimore Sun. A deed of trust for the home did not arrive at city offices until June 4, they said.
Recording real estate transfers involves several city, judicial and state offices, which check for outstanding liens, collect various taxes, verify documents are in order and make the new ownership a matter of record.
“Delays can occur at each stage in the process,” said Henry Raymond, the city’s finance director.
Title Forward said in a statement to The Sun that “pandemic-related staffing challenges” contributed to a backlog at the company, as well as problems with a vendor.
“We take full responsibility for the delays that occurred at Title Forward,” the statement said.
The company said it’s now back to a more typical schedule of submitting titles to be recorded within two weeks of settlement.
Title Forward noted that the recording delay had no bearing on the reassessment of the property’s value and subsequent increase in property taxes.
Raymond said it took city staff until Aug. 19 to process the documents and send them to the next stop, the circuit court land records office. Previously, the city could process the documents as quickly as a week, he said.
Raymond said the pandemic led to staff working from home and using “workarounds.” By spring of this year, the backlog was closer to six weeks, he said. A new electronic filing system was introduced in June to help reduce paperwork delays, Raymond said.
Staff has since returned to their offices, but the process slowed again as some employees contracted COVID or were exposed to it and had to quarantine, Raymond said. During the pandemic, the department has had as little as half its normal staffing, he said.
Meanwhile, an “unprecedented number” of transfers have come in, Raymond said. In the fiscal year ending June 30, the department handled 50,638 transfers, he said, compared to 29,108 the year before and 41,062 in the year that ended June 30, 2019.
Phillips, the SDAT real property division supervisor, said Foster and Plattenburg’s ownership was stamped on Aug. 25 by the circuit court clerk. Then it took a couple of weeks for SDAT to update its records. By the end of last month, both the city property tax and SDAT’s property websites listed the couple as the owners.
A hot housing market
Phillips, who previously did title work himself, said someone should have alerted Foster and Plattenburg that the renovations would prompt a reassessment and a higher tax bill. New homebuyers may not be familiar with how and when property values are assessed, he said.
“They depend on the real estate professional and title company to tell them,” he said.
Title Forward said in its statement that while it was not their “legal responsibility to inform a buyer that their tax bill may increase, it is good customer service and best practice.
“We regret if we didn’t do so in this instance,” the statement said.
The real estate agent, Mager, said that he feels sorry and angry about what the family has gone through, but he has no control over what happened after settlement.
“As the buyer’s agent, I’m not involved in the financial decision-making,” said Mager, who at the time was with Redfin, the web-focused real estate brokerage. Title Forward is a subsidiary of Redfin.
The housing market, only now showing signs of slowing down after burning hot for more than a year, may have added to the problem, some say. Some buyers ended up in bidding wars, or rushing to complete a sale knowing they face competition, and real estate agents, lenders and title company representatives may not be spending enough time to help them understand the process.
Looking for options
Complaints about title companies have risen slightly since the start of the pandemic, said Craig Ey, a spokesman for the Maryland Insurance Administration. While Maryland does not regulate how quickly title companies must submit documents for real estate transfers, the administration investigates complaints about delays and other problems, Ey said.
So far this year, the insurance administration has received 23 “failure to record” complaints, the same as all of last year, he said. That compares to 15 in 2019 and 10 in 2018. Ey said it has not received a complaint about Title Forward.
The experience of Foster and Plattenburg highlights the importance of making sure you’re getting good advice and support when buying a house, said Annie Milli, executive director of Live Baltimore, a nonprofit organization that works to attract and retain residents by helping them find homes.
Milli encourages homebuyers to work with local real estate professionals and lenders and get to know the community association in the neighborhood where they’re looking.
“Homes are selling so much more quickly, and people are facing having to make decisions more quickly,” she said.
Justin Williams, a Baltimore-based real estate lawyer, said he was surprised Foster and Plattenburg’s house did not have a 10-year tax credit that covers increases in property value due to renovations in historic districts such as Ashburton. (The city’s Commission for Historical and Architectural Preservation said the previous owner did not apply for one. The previous owner could not be reached for comment.)
Williams and others hope such problems don’t scare people off from buying homes in Baltimore, something the city has sought to encourage to widen its tax base.
“It’s another hurdle and roadblock to the city’s growth,” he said.
Foster said she continues to look for options. She has been researching how other homes in the area have been valued and taxed.
It’s not what she envisioned, all those years she was renting, sometimes “not in the best neighborhoods,” to save money for a place of her own.
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“I just want to enjoy my home that I emptied my life savings into,” she said, her voice catching. “I made sure I was saving up for this part of the American dream. That dream was short-lived.”