T-30 Guideline - Tax Deletion Endorsement

Explanation:

Use of this endorsement is governed by Texas Procedural rule P-20.B Standard Exception relating to Taxes.

It is instructive to remember that in Texas, taxes for property subject to agricultural and related open space use may receive a tax exemption that postpones tax increases until the qualifying use is changed.  In other words, taxes continue to be charged at the commercial rate but the payment of those taxes is made at a reduced rate.  The difference remains a charge against the property.  If the use of the property is changed from agricultural or open space, the taxes can be “rolled back” to collect the uncollected difference.  The roll back period is 5 to 7 years depending on the type of exemption granted.

Underwriting Requirements:

Regulatory Requirements:

P-20 B.2:

A Company may not insure against rollback taxes unless:

The Company has satisfactory evidence in its file that the assessed taxes for the current year are not based on an agriculture or open-space valuation; or

(i)         The rollback taxes have been assessed by all of the taxing authorities;
(ii)        The rollback taxes are collected at closing by the Company, and
(iii)       The Company will pay the roll back taxes in the ordinary course of business.

Please also see R-19 and R-24 for more information regarding this endorsement. 

Underwriting Requirements:

1.    Review the tax certificate from the central appraisal district to determine that the property is not assessed based on an agriculture or open-space valuation.

2.    If the property is subject to agriculture or open-space valuation:
a.    Determine that taxes have been assessed by all taxing authorities;
b.    That rollback taxes will be collected at closing; and
c.    Such taxes will be paid at closing.

3.    If the tax office will provide a written statement that the use will not be changed, you may issue the T-30.

For further guidance, refer to the applicable subsections in Section 11.04 of the National Underwriting Manual on Virtual Underwriter http://www.vuwriter.com/vumanuals.jsp?displaykey=UM00000208

The underwriting guidelines contained herein have been provided for general reference. The facts, circumstances, and location of the subject property should be considered when determining the issuance of the requested form or endorsement. Please note that all of the forms and endorsements included in this system may not be available in all states. Accordingly, please contact the appropriate Stewart Title Guaranty Company underwriting personnel in order to determine availability.

Compliance with the underwriting guidelines contained herein in no way obligates Stewart Title Guaranty Company to issue any form or endorsement.

This guideline applies to the following form(s):

T-30 TX Tax Deletion Endorsement