You may have received your tax bill in late August or early September, but if you escrow your taxes and insurances, then you probably just received a copy of the bill being sent to your mortgage servicing company.
Though the bills are sent out 3rd quarter our mortgage companies usually hold on to these bills and don't pay them until November or December. The deadline for payment is December 31.
As a result, the question often comes up during closings that occur during October, November and December, why am I paying taxes again on the settlement statement? This amount for many sellers can potentially break a deal, as they forget during the fourth quarter, if the payment from said mortgage company has not arrived and been recorded at the tax office, they are responsible for the bulk of the year and if you live within the city limits it can be thousands of additional dollars.
Now, don't get too panicked. Sometimes, especially in November and December, the mortgage companies have already paid the bill and it takes a friendly phone call to the tax office to get verification of payment. You can handle this confirmation but the final confirmation at closing will have to performed by the attorney or paralegal. Remember, the reason for this, is that there can be no outstanding liens against the home at closing.
If you do have to bring your portion of the year's taxes at closing because they have not been paid yet, you will be reimbursed, but it could take weeks to do so. Once again, if you planned on bringing little to no money to closing because your deal is a "break-even" so to speak, this could really put a wrench in things if you don't have the liquid cash on hand at closing time.
My advice is that if you are currently under contract or think that you may be going under contract soon, have your agent to help you verify the status of your tax bill for the current year. Sometimes, banks will work with you if enough time is given and allow you to use the portion of your escrow that they are holding for taxes to pay the tax bill. Keep in mind this is rare, but I have been made aware of exceptions that have occurred.
Once again, it's a matter of being proactive and having a great agent to help you with these challenges along the way.
"When details matter, experience counts!" Call or post today if you have questions or suggestions regarding this topic. Have a great weekend!
Brooke Cashion
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