Did You Know?

March 15, 2019

Did you know that closing a home sale around the time property taxes are due could mean that your escrow company is going to take the taxes out of your proceeds, even if you have an impound account with your mortgage holder?

Yes, you read that correctly! An escrow/title company is required to confirm that property taxes are paid prior to closing in order to transfer clear title to the buyer.

Now, I don’t know about you, but I would sure like to avoid paying my property taxes twice and then have to wait for my refund from the County Tax Assessor. From what I’ve heard, this can be a pretty lengthy process!

In order to avoid this waiting game, you should call your mortgage holder and find out when they plan to pay the property taxes. If it’s close to the closing date on your property, you can request that the property tax payment be held in the impound account so your taxes don’t get paid twice. Although it will vary depending upon the mortgage holder, you should only have to wait for 14-30 days to receive your refund from the impound accounts. It’s important to pay close attention to the dates on this, as you certainly don’t want your taxes paid late – that’s a hefty 10% penalty!

If your closing date is near the deadline for a late payment, it’s better to have taxes paid from the impound accounts and have escrow withhold the amount due for property taxes. Once they receive confirmation from the tax assessor that the property taxes have been paid, they’ll send you a check refunding the amount.

Now, if you’re purchasing another property and need every dime of proceeds from the sale, you may want to consider closing after the late payment date. This can help prevent issues with a hold back or a duplicated payment of property taxes through escrow. Another option that’s available is to pay any property taxes that are due in advance of putting your home on the market.

Below are the key dates that will help you determine what works best for your situation: 

November 1 – First Installment Due
Covers the tax period from July 1 to December 31.

December 10 – First Installment Becomes Delinquent at 5pm
A 10% penalty will be added to taxes due. If December 10 falls on a weekend or holiday, taxes are not delinquent until 5pm on the next business day.

February 1 – Second Installment Due
Covers the tax period from January 1 to June 30.

April 10 – Second Installment Becomes Delinquent at 5pm
A 10% penalty will be added to taxes due. If April 10 falls on a weekend or holiday, taxes are not delinquent until 5pm on the next business day.

Leave a Comment

Previous post:

Next post: