AboutDavid Hollingsworth Expertise I have quite a bit of experience in the field of Probate in Central Indiana along with general areas of civil law. I do not answer question regarding crimminal law or misdemeanors.
Expert: David Hollingsworth Date: 5/12/2008 Subject: Property taxes after closing
Question We sold a house at the end of 2006 in Indiana. At the time, taxes for 2006/payable 2007 had not been determined. As part of closing we paid $8000 for the property taxes for 2006/payable 2007. The cost that was charged to the new homeowner was $11,000. Who owes the $3,000? Here is the language in the offer to purchase:
Taxes, Assessments and Pro-rations:
Real property taxes shall be pro-rated as of the date of closing. That is to say, Seller shall be charged with and pay taxes on the real estate and improvements covered by this Agreement that are payable in the current year and for that portion of taxes payable the following year calculated as of the date of closing, and purchaser shall pay all taxes subsequent thereto. Pro-ration shall be made on the basis of the current tax rate and assessed valuation as of the date of closing and shall be done on a calendar year basis. Seller shall be responsible to pay the real property yaxes up to the date of closing.
Neither of us wants to pay the difference if we don't need to. Who is responsible?
Thanks so much!
Answer Go back to your HUD-1 form from your closing. I would bet the ranch that the real estate taxes were in fact pro-rated at the time of closing. As a matter of fact that is one of the services you pay for at the closing for the title company to make sure all charges, credits or add backs are appropriately listed on the closing statements. I really cannot answer any more than this because I would have to have a lot more information to actually figure out who owes for what periods based on the actual date of transfer. Generally speaking the taxes as you apparently know are paid in arrears. They are basically assessed in MArch for the preceeding year. THen the payment is for periods of time not matching the actual pay dates in May and November. This is why the title company would have done this for you if they had a copy of the language of the sales agreement as you cite. If the buyers are now asking you to kick in money then go back to the title company for the break down. I would suspect there may have been further language regarding increases in the assessment coming due after the closing. Did you look over the rest of the sales agreement. I would take the whole document to the title company that did the closing and they will figure it out for you for sure. JDH
