Buying real estate comes with a lot of financial planning. Smart homebuyers and investors know that property taxes should be considered when determining their monthly costs. So, you can imagine Demetris Kelly’s shock when she learned overnight that her tax bill was double what was disclosed to her before closing on her new home. That shock turned into terror when the discovery also revealed that she owed $6,700 in back-taxes from 2014 in addition to double yearly future payments. Money she didn’t have.
Fearing the loss of her home, she reached out to her local news and the Cook County Recorder of Deeds Fraud Prevention Department to help. Turns out, she and several other homeowners in a suburb in Illinois were hit with PIN slamming. Home developers in the area built several homes straddling two lots, meaning that their tax bills were twice as much as what was expected. For Kelly and several other homeowners, this surprise bill meant that their homes were in jeopardy of foreclosure.
What is PIN slamming?
Every parcel of land has a unique legal description and property index number or PIN. PIN slamming is when a seller omits, either by intention or neglect, an additional parcel attached to the property or PIN from a potential homebuyer. As a result, the new homeowner gets “slammed” with double property taxes.
Kelly filed a suit against the business, Synergy, that sold her the property, but they claimed no responsibility or negligence. Synergy insisted they had no legal obligation to disclose the second PIN attached to the property. Proving she had a legitimate claim was difficult. Her title insurance company initially denied it but reopened the case when they were contacted by the media.
How can homebuyers protect themselves from PIN slamming?
Good faith negotiation is a part of any real estate transaction; unfortunately, as with the case of Kelly before she brought it to the media’s attention, proving deception or neglect can be difficult. Here are some of the best ways for prudent homebuyers to prevent being PIN slammed.
- Ask your realtor and real estate attorney about the risk of PIN slamming in your area
- Order a survey to find multiple PINs before you buy
- Confirm what PINs are attached to the property by reviewing the public records
Work with a real estate professional
Working with a real estate attorney is always good advice to new homebuyers and real estate investors. Purchasing a home comes with a lot of unpredictable scenarios to consider. Working with a seasoned attorney in the area usually results in positive outcomes. Laws regarding disclosure can be nuanced, and an attorney will draft a contract with contingencies that will work in your favor. Additionally, they can help explain what a title insurance policy will cover, the difference between the exceptions and exemptions and how you can get better coverage.
If you’re not working with an attorney, homebuyers should at least be working with a buyer’s real estate agent and avoid “double-ending.” Be sure to ask about PIN slamming and any other unique issues that adversely affect buyers in the area and how to combat them. Realtors and real estate agents can provide you with a wealth of insights and tips, but unlike an attorney, their advice can’t be considered legal counsel.
Review the land survey or request a new one
There are several reasons a buyer should consider getting a new survey before closing, but an updated survey isn’t always required by the title underwriter depending on the terms of your policy. If you don’t want to invest in a new survey or a better title policy guaranteed to cover boundary issues, you should at least be sure to review the current survey and legal description to confirm you’re actually purchasing what you think you’re purchasing.
This is something everyone should be doing regardless of the risk of PIN slamming. Many homebuyers assume that a fence indicates the size of the lot, but a fence isn’t always placed within the boundaries and it’s not legally binding.
Viewing the seller’s survey will also give you a better idea if you should order a new one. For instance, if the old survey doesn’t show a new improvement, like a pool or secondary structure on the property, and they look suspiciously close to the public easements or the neighbor's lot. These types of issues are important to find before you close, so you can require the seller to address them or back out of the deal.
Confirm with the county the PINs associated with the property
Most counties throughout the United States have property records online. Most of the documents are accessible to the public for viewing and printing uncertified copies. In some areas, you may have to pay to access certain records.
This process of searching the property records for any issues or defects is called a title search. This is something that the title company working on the transaction does, but it doesn’t hurt to do a cursory search.
Doing a title search manually can be time-consuming, and it’s easy to miss something, so homebuyers are encouraged to get a homeowner’s title insurance policy.
There are three sites where you can gather data related to a property’s ownership history, legal description, and tax history. They include the County Property Tax Collector or Assessor, the County Clerk of the Court’s or County Recorder, and the County Property Appraiser. Some areas might call these municipal departments.
When you’re reviewing the information from these departments, be sure to do the following:
- Search for the records by the current owner name -- more is less for many systems, so start with first and last name and follow the search instructions carefully to yield the proper results.
- Check the deed or deeds found in the clerk of the court to see what PINs are matched to the address.
- Note the legal description of the property and make sure all the records match.
- Make sure the legal description of the survey also matches the records you find.
Kelly did everything right by hiring a real estate attorney, working with a realtor, and purchasing a homeowner’s title insurance policy. This story should not dissuade any homebuyer from doing the same.
After two years, she reached a settlement with the company who sold her the property, and the county tax assessor also helped by consolidating the properties and reducing the amount owed. This was a happy ending for her and her family, but not every story ends so well for homebuyers entangled in a real estate mess.
This trend of PIN slamming only seems to have affected about 17 families in the Markham and Robbins neighborhoods in Cook County, Illinois. Despite the unlikelihood of this specific issue affecting the average homebuyer’s experience, it’s a cautionary lesson on real estate due diligence to pass along to others.