Closings with Karissa is back with a few helpful reminders on property taxes and second half payments.
It’s that time of year again.
Real estate taxes are due to the county treasurer. Do you pay them before closing? Will the Title Company pay them before closing? What if the seller’s lender pays them before closing and the Title Company collects for them too? These are some of many questions that might swirl around homeowners’ heads right before closing.
First & Second Half
Taxes are available for payment in November of the current year with due dates of December 20th of the current year and the following May 10th. Taxes can paid in full in December or paid half and half in December and May. They first half is considered delinquent on December 21st and will start accruing late fees and penalties on that date. The second half is considered late on May 11th and will start accruing late fees and penalties on that date. If your closing is taking place after one of those dates and you do not have taxes set up in escrow, it is advisable for payments to be made prior to closing to avoid extra charges.
Taxes & Your Closing
Taxes are considered a lien on real estate. They are always there (unless the landowner is tax exempt) and will be in first lien position to all other liens – including mortgages. This means that taxes will always be paid out first in the event of a court action and your closing agent will make sure that tax payments are up to date. If current taxes are not yet paid, they will apply that payment to your settlement statement to be paid at closing, including any applicable fees.
If closing takes place in October or November, it is likely that the seller rather than the buyer will receive the annual tax statement. This is because the county treasurer’s office may not have new owner information updated prior to mailing out November tax statements. If this happens the taxes are still the responsibility of the party that agreed to pay the year’s taxes as part of the real estate contract.
Things to remember:
- Taxes are due December 20th and May 10th
- The Title Company will pay off taxes based on the terms of the contract
- The Title Company will never keep funds collected for taxes already paid, they will always refund payments rejected by the treasurer for previous payment.
If you have more questions about taxes, please reach out to your closing agent and they will walk you through taxes and prorations. It is our job and our pleasure at Tallgrass Title!