I closed on a house in Texas last July. At closing, they estimated the property tax for the year and then had the seller pay the prorated portion of the tax for the time they owned the house in that year.
At year end however, we discovered that they had underestimated the tax and we were short on our escrow by about $2000. The mortgage company made us pay the difference to "Catch up" our escrow.
The thing that makes me mad is that this means that the sellers underpaid the tax by over $1000 at closing. Whose fault is this, mortgage company, title company, or me? Is there any way I can recover the money from the title company? Are they liable?
2006-06-22 04:15:00 · 10 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
I reviewed my closing documents and believe I know what happened. There is a document that states that they used prior year tax to do the proration. This is where I messed up. When we closed, the 2005 assessed value was already published. What the title person did was this. She used he 2004 value, which was 24K less than the 2005 value.Then she applied a homestead exemption of 11K (which the seller didn't have in 2004, but would have in 2005. However, when you buy a house, you can't claim homestead exemption the first year unless you lived there on Jan 1.
So the amount she used to figure the tax was 35K less than the actual assessment. I just feel ripped off because the seller knew the closing agent and asked us to use her.
2006-06-23 02:08:46 · update #1
Usually in a real estate purchase you sign a document which discloses that the settlement agent relied on previous year tax amounts to determine the proper proration between buyer and seller. If the amount turns out to be different, then the document typically states that it is left for you to work out with the seller. To really know if anyone is at fault, you need to have a title search done to determine what the title company should have known at the time they closed the loan. If they had public record information that the taxes were incorrect, then they are liable. If they had no way of knowing the taxes were higher then the recourse would be against the seller.
2006-06-22 16:23:58 · answer #1 · answered by spirus40 4 · 0⤊ 0⤋
Property Taxes At Closing
2016-10-21 13:14:02 · answer #2 · answered by ? 4 · 0⤊ 0⤋
Taxes are taxes. When you closed you continued to pay the property taxes at the same rate as the old owner. At the end of the tax cycle you most likely received a supplimental tax bill which is your county billing you for your true tax amount. From that point forward your taxes will be at the new assessed value.
I bought a property in AZ which has not been assessed yet. The title company is estimating the numbers but what if they are wrong? Should I try and collect money from them by trying to do their best even when the county has not gotten off their butts and assigned a tax figure to my home?
Your best course of action in this matter is to contact the county assessors office and assertain the true tax figure for your property; then do the math to figure out if the old owner got out of paying $1000. I will bet the old owners paid every dime they were responsible to pay. Your real estate agent should have told you that you were going to receive a supplimental bill and that your taxes would be going up from what the old owners were paying.
Best of Luck
Kevin 866-562-6838 x 106
kruorock@firstratelending.com
2006-06-22 06:59:57 · answer #3 · answered by Mudisfun 3 · 0⤊ 0⤋
This is the responsibility of both the escrow and mortgage companies. I would call and discuss this with your escrow agent and start whatever is needed to get your money. It is not right for you to have to be responsible for what is somebody else's responsibility, namely the last owner. Legally I am not sure who will be required to pay you, but somebody sure has to. The best bet is contacting your escrow agent. I was sent a check for the difference of my taxes when it was under estimated. Maybe you will too if you just wait a bit. I would still go ahead and contact the escrow agent and let them know of this discrepancy. They will know what is needed to be done in order to correct this oversight. Good luck in getting your money. One more item, if the escrow company, mortgage company and owner refuse to work with you I suggest you file in small claims against the owner. Just take in your paper work and you will get a judgment. Use this as a last resort though as cooperation will get you your money faster. If this is not corrected any judgement you get can be placed as a lien against the property the seller currently owns. I doubt they would want to do this as it will make it that much more difficult for them to get refinancing. If it comes to this you may have to wait until they sell their current property or refianance it. If they did not purchase another property you could garnish their wages. Again, I hope it does not come to this, and good luck.
2006-06-22 04:26:22 · answer #4 · answered by Serenity 7 · 0⤊ 0⤋
It's likely that the Title company had to estimate the taxes since the amount of taxes were not yet released. They probably went off the previous year for the amount. And taxes go up every year... almost.
I would contact your mortgage company and ask them if you can hold the title company liable. good luck.
2006-06-22 04:22:09 · answer #5 · answered by Sarah K 2 · 0⤊ 0⤋
The title company didin't underestimate your taxes, your house got re-accessed. Whenever a home changes owners, the city/township/etc. re-accesses the home value and usually the taxes go up. The homestead law prevents taxes from going up too much during the period you own the home.
For example, when I purchased my 1st house, the couple had lived there for 18 yrs. and their annual taxes were around $800. Within my 1st year of ownership, the township re-accessed and my taxes shot up to $2100 a year. Your real estate agent should have prepared you for this...
2006-06-22 04:22:20 · answer #6 · answered by KL 5 · 0⤊ 0⤋
ou can contact the title company - that is why you have title insurance. But, please do not blane the Mortgage Broker, he / she only know what is given to them The sellers realitor should have listed the correct taxes in the orginal listing - and the person who die the title search should have caught it. But, my ? to you is, did you apply for a mortgage excemption credit and a homestead credit after your closing, say a month later at the court house. They the sellers may have had this as a credit, and it is up to you to re-apply for the credits....Good luck.
2006-06-22 04:23:11 · answer #7 · answered by W. E 5 · 0⤊ 0⤋
When you signed your papers at the title company there is a form that makes the seller of the property liable for the increase in taxes. if you have any questions specifically regarding this you can email me at stephen at earthmortgage dot com
2006-06-22 04:30:29 · answer #8 · answered by Stephen 3 · 0⤊ 0⤋
Looking for a good answer on this too
2016-08-08 01:13:45 · answer #9 · answered by Juliet 3 · 0⤊ 0⤋
I was wondering the same thing myself yesterday
2016-08-23 00:20:15 · answer #10 · answered by renae 4 · 0⤊ 0⤋