Bought a new home in Feb '06. Property taxes for 2005 ?

businessclass · Joined: 04 Oct 2005 Posts: 3

I purchased my home in February of 2006, and now I just received a county tax bill for 2005 for around 5K. I'm looking at my closing statements to try and figure out if I owe this or if my seller owes it. Normally, does they buyer pay the taxes for 2005 if the house was bought in '06????

I'm looking at a US dept of housing settlement statement and under the amts paid by or in behalf of borrower it says:

Adjustments for items unpaid by seller:
City taxes 7/01/05 to 12/31/05 - $346.53
County taxes - 1/1/06 to 2/13/06 - 83.59

Any clue what this means? Am I going to owe the $5000 tax bill?

Thanks.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

It depends on your contract and your state. Here in Illinois, in most cases the seller pays the taxes as a credit to the buyer. The buyer then has money set aside into an escrow account (if they set that up) so that when the tax bill comes due, there is enough to pay for it. In this case it sounds like either A) the taxes were paid by the seller (this would show on the title work) or B) part of the contract states that the buyer assumes responsibilities for the tax bill. If you're wondering you could probably call the title company where you closed at. They should be able to explain it to you how it's done locally.

m2c · Joined: 03 Aug 2005 Posts: 937

I assume this is Chicago. Not sure about IL, but from the tax proration dates on the HUD, the city tax is paid “after earned” – last half 2005 due sometime in 2006. County taxes appear to be concurrent. Why the difference? Why did county tax go through closing date and City tax did not? Who knows?

But the proration figures are LOW -- $346.53 for a halftax on a “$300K condo”?!!!! $346.53 proration for a $5K bill? Was this new construction? Maybe IL does their property reevaluations midyear. Unusual but could be. Perhaps some sort of screwup was behind the payment increase of $250 when the loan was transferred to Citimortgage.

Certainly worth the effort to find out. Your LO probably has a copy of the “seller’s side” of the HUD 1 and could see if the title company held funds for payment of 2005 tax … but in this case the proration dates wouldn’t make sense unless they were holding for the FH 2005 tax.

chow · Posted: Wed Aug 02, 2006 7:47 pm Post subject:

If you're in Cook County you can go to the tax records online and check to see exactly what happended. Cook County is weird. They bill county and city at different times, and the semi annual taxes are uneven amounts.

When I was buying those loans and setting them up for servicing- I would just grit my teeth when I had to work on one.

Call the Title company and pull out your purchase agreement. I have found more than one title company who didn't pay the taxes properly-and I have caught more than a lender or two who did not either!

m2c · Joined: 03 Aug 2005 Posts: 937

Probably this is a variation of the old Chicago political mantra – now it’s “Tax early, tax often”.

Since an earlier post spoke of a monthly increase in payment of $250 early in the loan after it went from NCB to Citimortgage, my bets are on some sort of error at closing.