My mom bought a house in November and the title company errored in their estimation of taxes that needed to be collected from the seller. They assumed seller had an over 65 exemption which the seller did not. They didn't collect enough and now we have found the issue. I think that this is their job along with title commitment. Apparently they have a form that she signed that shows it is not their fault or something like that. She is sending me documents so I can take a look. Shouldn't the title company make this right? Or is this sellers responsibility? Anyone dealt with this and have some guidance?

Thanks. I'm trying to figure out how much but looks to be about $2k.

I would start with the title company. Title company can contact the seller.

I also think this should be corrected in the tax code. Any errors in exemptions die with the previous owner and taxing authorities cannot go after new owners for taxes due to those errors.

Look at the "Prorations" section the the sales contract. If the amount collected from the Seller is short when the tax statements come out, it is the Seller's obligation to pay their portion of the shortage to the Buyer. I wouldn't let the Seller get away with keeping $2,000.00 that they owe under the contract. A strongly worded certified demand letter with a date for compliance may get them to pay what they owe. If not, file on them for breach of contract and you can also seek attorney's fees under the contract and under Texas statutory law.

Unless I'm misreading this the seller isn't trying to get away with keeping anything and probably isn't even aware of the issue. Before I sent a strongly worded certified letter with a date of compliance or started suing anyone I'd talk to the title company and the seller.

This is the advice if Seller refuses to pay under the contract. I don't think the op is wanting to go around just suing anyone for kicks and neither do I. However, this scenario happens all the time and the Buyer just gets frustrated and takes the hit. This is also similar to where a Buyer backs out of a purchase after the option expires and then refuses to sign a release of earnest money/termination of contract so the earnest money gets tied up at the title company.

So what if the seller had paid too much. Would you be rebating the overage?

If it's a nominal amount, I don't think either side is to bent out of shape. However, if it is more than a nominal amount, the Prorations section of the contract calls for the Buyer or Seller to reimburse the party who has been shorted after the annual tax statements come out.