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.
Hi,
I'm closing soon and noticed that on HUD seller will be giving prorated tax credit based on 2014 tax bill. However, 2015 home appraisal / estimated tax is out and 2015 estimated tax is aprox $650 for the year higher than 2014 actual tax (appraisal was increase by about 40k in just one year). i.e. seller needs to pay $250 for me to cover his taxes properly.
Title company is saying that they will only use 2014 tax bill, the one available and have provided tax certificate based on that. They say buyer / seller to handle this among themselves.
However contract Section 13 Prorations say clearly that tax should be prorated till closing date.
Questions:
What is norm here ? is Buyer asks seller to pay the difference at closing? or sends them a bill once actual tax bill arrives? If so, why would seller would pay this after the fact?
Isn't this a loop hole here or is this just the normal practice that buyer eats the difference of tax bill?
Please advice what is best way to bring up and discuss this will seller.
Thanks
If done correctly using people and companies with common since, the seller is responsible for this years portion of taxes until the closing date unless your contract states differently, which I don't think it does.
The buyer doesn't have to send anything, the taxes are paid at closing.
The new tax assessments have come out, but they aren't set in stone yet as cities and counties tend to change their actual tax rates each year and aren't set until about October, which is when the actual tax BILL comes out. A title company can't use the preliminary because they don't know what the final will be.
You close with a known number, and at the end of the year, once the tax bill comes, you send a copy of the bill to the title company who will contact the seller for reimbursement. Most title companies will play middleman for this. Otherwise, you send your actual bill in October to your agent who sends it to the other agent who sends it to the seller for reimbursement.
If done correctly using people and companies with common since, the seller is responsible for this years portion of taxes until the closing date unless your contract states differently, which I don't think it does.
The buyer doesn't have to send anything, the taxes are paid at closing.
Slow down, need4speed. What are you trying to say?
Last edited by jackmichigan; 05-07-2015 at 07:46 AM..
Reason: s l o w
The new tax assessments have come out, but they aren't set in stone yet as cities and counties tend to change their actual tax rates each year and aren't set until about October, which is when the actual tax BILL comes out. A title company can't use the preliminary because they don't know what the final will be.
You close with a known number, and at the end of the year, once the tax bill comes, you send a copy of the bill to the title company who will contact the seller for reimbursement. Most title companies will play middleman for this. Otherwise, you send your actual bill in October to your agent who sends it to the other agent who sends it to the seller for reimbursement.
It looks as if this thread may have started out in a local forum and was moved to Real Estate. Is that the case?
Of course, tax prorations are handled differently in different areas, depending upon how the taxes are paid. It sounds like the OP's situation is that they are paid in arrears.
If the above process is an accurate description of how it's handled in Texas, that sounds like a terrible process. I would hate to try to recover an expense after a closing. Can't they at least hold an estimated amount in escrow until the tax is paid?
In Michigan, the tax prorations are completed at closing--we don't need to deal with estimates.
It looks as if this thread may have started out in a local forum and was moved to Real Estate. Is that the case?
Of course, tax prorations are handled differently in different areas, depending upon how the taxes are paid. It sounds like the OP's situation is that they are paid in arrears.
If the above process is an accurate description of how it's handled in Texas, that sounds like a terrible process. I would hate to try to recover an expense after a closing. Can't they at least hold an estimated amount in escrow until the tax is paid?
In Michigan, the tax prorations are completed at closing--we don't need to deal with estimates.
Yes, I believe this was in a state specific group, can't remember. However, at closing, both the buyers and the sellers sign a piece of paper that states when the final tax bill comes out for the year, the seller will agree to reimburse the buyer for any taxes not paid. Because of this, it's not a surprise when they're sent the bill and told they still owe $X amount. They are told up front.
They do this because if you close today and use the new assessed value, but then the new owner goes in to protest the value, as most counties have through the month of May, the taxes might actually be lowered and now the seller paid too much. Or if the county and/or city decide to lower/raise the taxes which are set later in the year, the amount is also wrong.
Because of this, they use a published true value, and then deal with the tax bill when it comes out in October.
Yes, I believe this was in a state specific group, can't remember. However, at closing, both the buyers and the sellers sign a piece of paper that states when the final tax bill comes out for the year, the seller will agree to reimburse the buyer for any taxes not paid. Because of this, it's not a surprise when they're sent the bill and told they still owe $X amount. They are told up front.
They do this because if you close today and use the new assessed value, but then the new owner goes in to protest the value, as most counties have through the month of May, the taxes might actually be lowered and now the seller paid too much. Or if the county and/or city decide to lower/raise the taxes which are set later in the year, the amount is also wrong.
Because of this, they use a published true value, and then deal with the tax bill when it comes out in October.
Can you please point out what form / piece of paper you are referring here? So I can expect and inform my title company to prepare that one for closing time.
Also is this normal process for all home sales in TX?
Can you please point out what form / piece of paper you are referring here? So I can expect and inform my title company to prepare that one for closing time.
Also is this normal process for all home sales in TX?
It's a title company specific disclosure, so there is no "form" to point you to. The title company has to show you where they got the number for the tax prorations and also say that if the number ends up being wrong, what each party can do about it.
It's a title company specific disclosure, so there is no "form" to point you to. The title company has to show you where they got the number for the tax prorations and also say that if the number ends up being wrong, what each party can do about it.
Yes, this is normal process in Texas.
You are right; I got copy of that form and it seems general wording more in the line to protect them and for that contract parties to deal with each other (directly or through their agents).
I am wondering if Sellers will be willing to pay in such case, means after the fact??
Specially my seller is going to be out of country and may not entertain claim to pay.
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.
