realestate
Real Estate

Property Taxes at Home Closing

Wed Apr 16, 2008 6:51 pm
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Property taxes are a part of all home closings/settlements. In most cases property taxes are paid by means of an escrow account through the lender to the government agency (City, County) twice a year, usually in June and December of each calendar year.

The previous owner (seller) or builder (if new construction) will have most likely paid some of the taxes in advance of their due date. In that case there is a proration of taxes by the closing attorney. The seller will have a Credit Due to them and the buyer will need to compensate the amount due at the closing.

In addition to any credit due the seller the buyer will need to pre-pay up to six months property taxes (depending what the lender requires) at the closing. Therefore, the buyer may need to pay something like 8 or 9 months taxes at settlement/closing. If the amount of the property tax per month is say for example $400 per month the buyer/purchaser would need to pay upwards of $4,000-$5,000 at settlement.

The amount of Hazard Insurance and Property Taxes due at closing may be in excess of $10,000 depending on how the numbers are calculated. This is a major knowledge issue for buyers to fully understand before engaging in any formal contract ratification.

I repeat for the record this is why I urge all buyers to secure the services of an Excellent Real Estate Attorney and Realtor.



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