Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Wow good find. He really put his foot in his mouth here.
While I wouldn't call it fraudulent this is certainly a serious issue that should be brought up. Would you consider spearheading a campaign to get this fixed? Possibly contacting the press?
This is why we have elected representatives.
"Fraudulent" sounds harsh but if you take someone else's money I call it fraud. Here is advisory issued by NCAR:
"If the tax rates and bills have been released by the tax office and have not yet been paid by the seller, taxes are prorated and paid at settlement. 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."
The seller is unknowingly being defrauded by being charged for taxes he has paid up to the date of sale then defrauded again by not being given credit for taxes he has prepaid from the date of sale into the future that has become the buyers responsibility.
I have tried to get the presses attention on this issue but they receive thousand of submissions and calls so will seldom respond, and to get the attention of NCAR you need to be a member. I will keep trying, Mike, how about helping us?
Part of the problem is that individual closing attorneys and real estate agents are just willing to "go with the flow". They don't want to "upset the apple cart". So much easier to just glide along without standing up for their clients, especially when the whole situation is hidden in the long terms of a long contract with which most clients have no familiarity. And even if clients read the contract as best they can, sussing out the effect on the dollar amounts is not obvious, particularly if they also read the Wake County rules about the proration on a fiscal year basis.
We depend on the professionals, we may even respect most of the professionals, but this is a clear case where they have dropped the ball and are not acting in the best interests of the sellers.
Soooo...
From helping a poster five years ago, this has devolved into the banality of just another mindless antiagent attack thread?
That's too bad.
You of all people wax on about how important it is to have a dedicated RE professional in your corner when selling your home, yet your own posted video belies just that fact...what is the point of paying someone more (vs low/flat fee) when you all just use standardized forms anyway? It's amazing to me that you even knew about this five years ago (!). I mean, WTF (excuse my language) but I think all anyone wants is fairness when calculating these things which is what having paid people on your side should deliver. Yet you still dig your heels in and deliver a tone deaf response. Look at the response by Bo as an example to follow. Another Realtor posted who seemed clueless on the actual issue as well. That is just crazy to me. I don't think this is a deliberate attempt at defrauding sellers but why are the sellers agents not representing our interests? That is what they are paid to do. I have my own thoughts on why but they aren't very nice so will keep them to myself.
Mike, you say "this has devolved into the banality of just another mindless antiagent attack thread?" You are sticking your head in the sand, ignore the issue, this is a serious issue involving thousands of dollars, could be over $10k if you consider a sale in late December when the seller has paid taxes to June 30 of next year but he would have to credit buyer for a whole year of current taxes and not get credit for taxes he has prepaid to June 30 of next year. SELLER HAS ALREADY PAID 18 MONTHS OF THESE TAXES!
We are not attacking the agent but trying to enlist agents to attack these mindless settlement attorneys and get the legislature to change the statute on proration that says Calendar Year that brings about this confusion and does not specify CY Arrears or CY Prepaid proration. Attorneys have fallen into arrears usage when it should be prepaid. CY could mean the Property Tax Calendar Year that runs from July 1 to June 30. https://www.thebalance.com/what-are-prorations-1798778
Real Property Tax Prorations
Every state bases its property tax calendar year differently. In California, for example, the calendar year is from July 1 to June 30th. First, find out how your county collects taxes. Some states collect property taxes in advance, some collect in arrears, and some collections depend on the time of year.
Here is a proration Calculator that uses CY correctly, however seller still gets shorted for taxes he has prepaid into following year: Property Tax Proration Calculator | Calculate tax per diem
CALENDAR YEAR PRORATION EXAMPLE:
Municipality charges $3,650 per calendar year ($10 per day). Closing is on June 1st. Seller paid the property taxes. Calendar year proration: The seller occupied the home from January 1st to May 31st or 151 days. The buyer reimburses the seller from and including June 1st to December 31st which equals 214 days. The buyer will pay the seller $2,140 at closings (214 days X $10 per day).
I can say that currently - it's because it's written into the contract, agreed-to by all, that it be done on a calendar basis.
Calendar Year proration is written into the contract but it does not say "Calendar Year Arrears" nor "Calendar Years Prepaid" proration and it should be the latter since property tax office operates on a prepaid tax year. If the sale is made for the month or so that the tax bill is prepared, mailed out and paid the settlement attorney can easily check to see if the taxes have been prepaid.
The people I asked are widely-considered some of the sharpest in the business. They said the ? comes up every year, especially around this time (I guess tax bills are fresh in people's minds, and they read the part that Wake Co says "for July 1 - June 30").
The value assessed, and the lien placed, is Jan 1. That's the primary reason (it seems) why they go by calendar year.
It's not done just because it's the way they've always done it. And it's certainly not done to the benefit of the attorneys or agents.
here's a link they gave me, but I'm not into government-speak...
As noted, anyone can negotiate their contract away from the pre-printed form.
And sometimes the Buyer's get the raw end of the deal ... new construction is based off of Jan 1 value, not the completed value nor the building permit amount.
Good info on the taxing process, Lien is placed Jan 1, 2016 for the 2016-2017 property taxes so the Lien is for July 1, 2016 - June 30, 2017 so Wake is a pay ahead prepaid taxes, seller should be refunded taxes he has prepaid for period that has transferred to buyer's responsibility, unless he has not paid his tax bills.
January 2016 1 Friday •Date as of which value, ownership, situs, and taxability of real and personal property are determined for 2016–17 property taxes. G.S.*105-285. First day of listing period. •Lien for 2016–17 property taxes attaches to all real property in taxing unit. G.S.*105-355.
As a matter of curiosity I looked on my settlement sheet for a home purchase in Brunswick County, NC. The settlement was on the Seller's nightmare date of December 30, 2011 when he would be penalized 18 months of taxes for taxes he had already paid if they used Wake County proration methods. The purchase contract had the same Calendar Year proration provision. Property tax proration was zero, I missed out on being credited a whole year of taxes. My only consolation was that the seller had paid taxes to June 30, 2012 for me; I only got 6 months instead of 18
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
