Friday, February 10, 2012

Should the seller pay for revised tax prorations based on a new assessment after closing?

Hi Diane,
we sold our home on July 28th, 2011, and i just recieved a letter (Feb 7, 2012) from the buyers of our home that i owe them a check for 231.00 for the price difference in the amount that thier property taxes have now gone up due to the home has gone up in assesed/appraised value. At closing, we paid for property taxes from 1/1/2011-7/28/2011 per the HUD based on the previous years taxes (which was 3,800). when they got their tax bill in November it was for 4,031) so they say i should owe them the difference. My question is, why should i have to pay them the difference if taxes went up or the home assessed/appraised for more? They had an appraisal done before they ever closed on the home so they new it was going to be worth more? Can they really ask me for that price difference, and do i have to cut them a check? 


Hi, Anon:  This is a good topic.  Thanks!

I would ask the buyers to provide a copy of a document in which you agreed to pay for a retroactive tax proration based on a new assessment.  If there isn't a document supporting such an agreement, in my non-attorney blogging title agent opinion I see no basis for you having to cover it.

Take a look at this language and see if it wouldn't have been useful in your situation.

"Buyer(s) understands that the calculations used for proration and lender escrow, if applicable, of taxes not yet due and payable are based upon the best information available.  The actual tax when due may be different due to reassessment or changes in millages.  Buyer(s) agrees to accept the tax proration figures as shown on the HUD-1 Settlement Statement without further claim to the seller(s).  Buyer(s) further understands that the lender escrow, if applicable, would change if actual tax figures are different than the estimated figures used to establish the escrow account."

We use this language in our Sales Agreement Satisfaction form.  It's not required but we find it helpful.

Good luck and let me know if anything interesting happens. ;)


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