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If a seller Settled on September 30 he would have prepaid taxes to June 30 of the following year but by way of Wake County methods he would be charged for taxes again for 9 months instead of given credit for the 9 month period that was prepaid by the seller and has become the buyers responsibility; just does not make accounting sense.
If a seller Settled on September 30 he would have prepaid taxes to June 30 of the following year but by way of Wake County methods he would be charged for taxes again for 9 months instead of given credit for the 9 month period that was prepaid by the seller and has become the buyers responsibility; just does not make accounting sense.
Ok. So don't settle in September.
What would be a better time to settle?
Is there a way for the seller to protect themselves? Or is this the law and cannot be changed in how it's done?
it's just a practice ingrained and unique to Wake County not practiced anywhere else in the country and no one has challenged in court, but as a seller you can refuse to close until prorated credit is given where credit is due. Even the North Carolina Association of Realtors advisory says "If the seller has already paid the taxes, taxes are prorated and the seller is given a credit for the buyer’s portion of the taxes." but is ignored. Best time to sell would be January first and you would not be charged for taxes but only lose the taxes you prepaid for the 6 months to June 30. December 31 would be the worst time to sell since you would be charged again for taxes for a whole year that you have already paid and you would not be given credit for 6 taxes prepaid to June 30 of the following year. Its crazy, illegal, not done anywhere else in the country and violates accounting standards but until challenged in court it will be considered legal.
When getting the HUD fees are added after the fact, they are a line item that is "just paid".
As a seller what would be the most advantageous time to sell your home with this arcane issue? How about about least advantageous?
I'm having trouble following completely.
Both parties know their bottom line fees at time of contract.
Tax prorations are among the simplest and most straightforward to calculate.
Don't accept less net proceeds to sell than you want, and don't get distracted by line items..
Both parties know their bottom line fees at time of contract.
Tax prorations are among the simplest and most straightforward to calculate.
Don't accept less net proceeds to sell than you want, and don't get distracted by line items..
Honestly that's kinda a crock and the vast vast vast majority of people will accept the way it's done. Honestly have you ever seen anyone challenge this in all your closings? If so what percentage?
Both parties know their bottom line fees at time of contract.
Tax prorations are among the simplest and most straightforward to calculate.
Don't accept less net proceeds to sell than you want, and don't get distracted by line items..
"It is the simplest and most straightforward to calculate" but they screw it up in Wake County every time, very basic accounting principle. Sellers sign off at settlement because vast majority are inexperienced at selling, does not notice the error and if they do, are bullied into signing because "that is the way we do it in Wake County" and they do not want to delay settlement.
Don't know what "Don't get distracted by line items mean", line items add up to the bottom line, scrutinize carefully because it came make difference of thousands of dollars in your net proceeds.
it's just a practice ingrained and unique to Wake County not practiced anywhere else in the country and no one has challenged in court, but as a seller you can refuse to close until prorated credit is given where credit is due. Even the North Carolina Association of Realtors advisory says "If the seller has already paid the taxes, taxes are prorated and the seller is given a credit for the buyer’s portion of the taxes." but is ignored. Best time to sell would be January first and you would not be charged for taxes but only lose the taxes you prepaid for the 6 months to June 30. December 31 would be the worst time to sell since you would be charged again for taxes for a whole year that you have already paid and you would not be given credit for 6 taxes prepaid to June 30 of the following year. Its crazy, illegal, not done anywhere else in the country and violates accounting standards but until challenged in court it will be considered legal.
actually, by December most bills are paid, and they're actually giving the Seller a credit. They're not charging them for 12 months of taxes.
"It is the simplest and most straightforward to calculate" but they screw it up in Wake County every time, very basic accounting principle. Sellers sign off at settlement because vast majority are inexperienced at selling, does not notice the error and if they do, are bullied into signing because "that is the way we do it in Wake County" and they do not want to delay settlement.
Don't know what "Don't get distracted by line items mean", line items add up to the bottom line, scrutinize carefully because it came make difference of thousands of dollars in your net proceeds.
based on what's been posted thus far .... the Seller has accepted this calculation method when they sign the contract. Can't be legally disputed when the settlement statement appears, nor the day after signing the contract.
The "real estate industry" has no interest in this. No agent or attorney or lender is making more because of this "loophole". Only Wake County government (and any other counties that use the standard NC contract).
It's very interesting, suddenly, and for good reason IMO. I'll have to chat with my most-seasoned R/E closing attorney about this issue. Obviously I'd stay silent for my Buyers. But you'd certainly prefer when representing a Seller that the contract state the Buyer will refund the Seller's property taxes on a pro-rata prepaid basis.
actually, by December most bills are paid, and they're actually giving the Seller a credit. They're not charging them for 12 months of taxes.
Wake County practice is they will charge the seller for a full year of taxes from January 1 to December 31 even though the seller has prepaid taxes to June 30 of the next year, he should be getting credit for taxes prepaid to June 30 of the following year so he actually is being double charged for 18 months of taxes. That is why I raise the issue but Realtors and Settlement Attorneys don't seem to be interested in fixing or even trying to understand the issue, the County, Realtor or Attorney does not get any of that fraudulent money, it all goes to the buyer. The buyer has to come up with big money for the purchase so maybe its a way to help them out.
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