Seller Won't Pay His Share of Property Tax

[Footer]

The closing company estimates the taxes based on the previous year and prorates for the closing settlement. Seller and Buyer sign a document that says if the actual taxes differ they will be re-prorated between the parties upon demand.

In my case the taxes were significantly higher than the estimate and the Seller owes me $2,000. I provided paperwork to my realtor, who forwarded to Seller's realtor who forwarded to Seller. I also contacted the Seller's ex- girlfriend and she spoke with him. However the Seller has not responded. It's been 9 months. Obviously he has no intention of reimbursing me for his share of the taxes.

The Seller is not a Florida resident but did buy another house in The Villages.

Just looking for opinions, advice, comments.

[vintageogauge]

That is why God created escrow accounts.

[Toymeister]

This one is easy. The dispute took place in Florida. You take him to small claims, you will win. The collections (if he does not pay) is by a judgement at the courthouse, eventually you will get paid when his second TV home is sold. Small claims cost 317.00 in filing fees and the cost to have this server in his local state.

[graciegirl]

The closing company estimates the taxes based on the previous year and prorates for the closing settlement. Seller and Buyer sign a document that says if the actual taxes differ they will be re-prorated between the parties upon demand.

In my case the taxes were significantly higher than the estimate and the Seller owes me $2,000. I provided paperwork to my realtor, who forwarded to Seller's realtor who forwarded to Seller. I also contacted the Seller's ex- girlfriend and she spoke with him. However the Seller has not responded. It's been 9 months. Obviously he has no intention of reimbursing me for his share of the taxes.

The Seller is not a Florida resident but did buy another house in The Villages.

Just looking for opinions, advice, comments.

In Florida property taxes are paid in arrears, one year behind.

[davem4616]

what a bummer

I would have been talking to an attorney months ago

[Stu from NYC]

what a bummer

I would have been talking to an attorney months ago

Need to talk to a professional but taking the guy to small claims court sound like the best bet.

Considering that $ 2000 is probably at least a half years tax does the company handling the closing have some responsibility here?

[New Englander]

That is why God created escrow accounts.

:bigbow:

[KRM0614]

Sue him and reimburse for legal fees. The taxes even when you buy if they differ the greedy villages should automatically refund you .

[dewilson58]

In Florida property taxes are paid in arrears, one year behind.


Very true, so if the pro-rata went up $2,000 for the gap period..........it must be a huge house & large value. So $2k in the scheme of things is nothing.


The numbers don't reconcile.


Small Claims Court..............don't you have to go to their state, not file in Florida?? (Assuming you want to collect) :ho:

[Villageswimmer]

The closing company estimates the taxes based on the previous year and prorates for the closing settlement. Seller and Buyer sign a document that says if the actual taxes differ they will be re-prorated between the parties upon demand.

In my case the taxes were significantly higher than the estimate and the Seller owes me $2,000. I provided paperwork to my realtor, who forwarded to Seller's realtor who forwarded to Seller. I also contacted the Seller's ex- girlfriend and she spoke with him. However the Seller has not responded. It's been 9 months. Obviously he has no intention of reimbursing me for his share of the taxes.

The Seller is not a Florida resident but did buy another house in The Villages.

Just looking for opinions, advice, comments.


What was the response from the closing company when you brought this to their attention? You paid them to avoid problems like this. Based on your OP, I think it was the closing company who dropped the ball.

None of this should be verbal between buyer and seller.

[grumpy@turton.us]

What was the response from the closing company when you brought this to their attention? You paid them to avoid problems like this. Based on your OP, I think it was the closing company who dropped the ball.

None of this should be verbal between buyer and seller.

In all our uses of Closing Agents/Title companies this could not have happened. Monies from all parties are to be in escrow before sale can happen.

[Kilmacowen]

When I bought my house 2 years ago, the taxes were deducted from the seller and given to me at that time. I was then responsible to pay the taxes when they became due. Closing was done thru Lin & Burnstin. Check your closing statements for tax payments.

[dewilson58]

Based on your OP, I think it was the closing company who dropped the ball.




Not at all. There are times when there is a gap between known taxes & the need to estimate. If the estimate made & there was a large increase or decrease.......an estimate error could happen. Estimates are disclosed and both parties sign off. Closing companies CYOA.


Like other posters have mentioned............escrow. Both parties signed off on not using an escrow. Whoops.

[Jayhawk]

The closing company estimates the taxes based on the previous year and prorates for the closing settlement. Seller and Buyer sign a document that says if the actual taxes differ they will be re-prorated between the parties upon demand.

In my case the taxes were significantly higher than the estimate and the Seller owes me $2,000. I provided paperwork to my realtor, who forwarded to Seller's realtor who forwarded to Seller. I also contacted the Seller's ex- girlfriend and she spoke with him. However the Seller has not responded. It's been 9 months. Obviously he has no intention of reimbursing me for his share of the taxes.

The Seller is not a Florida resident but did buy another house in The Villages.

Just looking for opinions, advice, comments.

There has to be some material facts missing in this story. Property taxes are obviously estimated since they only come due at the end of the year. They are estimated based on mill levy times the property value.

Did you do a major improvement project such as a pool or room addition? That increases value which increases the tax.

I've never seen a document that calls for "re-proration" as you called it. Check your HUD-1 settlement statement and you will see a credit for the seller's portion of responsible taxes.

[Bigmike18]

I did this type of work for many years as the owner of a title company. The normal process is that you use the prior years taxes as your basis for prorating the taxes. If there is a large change in the tax, more than 10% , the seller and buyer agree to recalculate the taxes when the bill is available. In this case we had a large increase in taxes this year, (wasn’t it a 25%increase) in Sumter county. I would say the seller owes his share of the increased amount.

[retiredguy123]

I did this type of work for many years as the owner of a title company. The normal process is that you use the prior years taxes as your basis for prorating the taxes. If there is a large change in the tax, more than 10% , the seller and buyer agree to recalculate the taxes when the bill is available. In this case we had a large increase in taxes this year, (wasn’t it a 25%increase) in Sumter county. I would say the seller owes his share of the increased amount.
Everthing you said is correct, but, according to the OP, the seller won't pay his share.

[dewilson58]

I've never seen a document that calls for "re-proration" as you called it. Check your HUD-1 settlement statement and you will see a credit for the seller's portion of responsible taxes.


Credit for seller's portion = Proration

[retiredguy123]

This closing process may be technically legal, but asking the buyer to send a bill to the seller months after the sale is absurd. The title company should be sending the bill to the seller and take responsibilty for collecting it. Or, collect some money from the seller at closing and hold it in escrow. Everyone involved in the transaction is making money, and the buyer is the only one who gets cheated.

[papasetti82]

This closing process may be technically legal, but asking the buyer to send a bill to the seller months after the sale is absurd. The title company should be sending the bill to the seller and take responsibilty for collecting it. Or, collect some money from the seller at closing and hold it in escrow. Everyone involved in the transaction is making money, and the buyer is the only one who gets cheated.

Title Co. does not hold Sellers portion of taxes in escrow,the Buyer gets
a CREDIT for that amount at closing.

[Stu from NYC]

Would think the title company running the closing would have checked the actual amount of taxes owed as of date of settlement.

Isnt it malpractice on their part?

[retiredguy123]

Would think the title company running the closing would have checked the actual amount of taxes owed as of date of settlement.

Isnt it malpractice on their part?
No. The tax bill doesn't come out until November 1 for that tax year. If the closing is held before that date, there is no way to know how much the taxes will be for the year. You only know what the taxes were for the prior year, but there could be a substantial increase for the current year.

[retiredguy123]

Title Co. does not hold Sellers portion of taxes in escrow,the Buyer gets
a CREDIT for that amount at closing.
The buyer only gets a credit for the estimated taxes, based on the prior year tax rate. But, if the tax rate is higher than last year, the credit is not enough to cover the proration of the current year tax bill. So, the title company tells the buyer to collect any shortfall directly from the seller when the tax bill comes out. In my opinion, the title company is in a better position to collect the shortfall from the seller because they can report the seller to the credit agencies if the seller refuses to pay what he owes. I think that should be the responsibilty of the title company as part of their expensive service.

[Jayhawk]

Almost every response to this thread is perfect evidence why no one should take legal advice from the posters on this website.

[Stu from NYC]

Almost every response to this thread is perfect evidence why no one should take legal advice from the posters on this website.

Very true and that is why I ask questions.

[Villageswimmer]

The buyer only gets a credit for the estimated taxes, based on the prior year tax rate. But, if the tax rate is higher than last year, the credit is not enough to cover the proration of the current year tax bill. So, the title company tells the buyer to collect any shortfall directly from the seller when the tax bill comes out. In my opinion, the title company is in a better position to collect the shortfall from the seller because they can report the seller to the credit agencies if the seller refuses to pay what he owes. I think that should be the responsibilty of the title company as part of their expensive service.


Right. Pretty much what I said.

[Vikingjunior]

This one is easy. The dispute took place in Florida. You take him to small claims, you will win. The collections (if he does not pay) is by a judgement at the courthouse, eventually you will get paid when his second TV home is sold. Small claims cost 317.00 in filing fees and the cost to have this server in his local state.

Nope, if the seller is a resident of a different state Florida has no jurisdiction over the seller.

[Toymeister]

Almost every response to this thread is perfect evidence why no one should take legal advice from the posters on this website.

Except for me who filed a small claims for a RE action with title company involvement with someone out of state. Filed last Thursday. You will find my advice to be exceptionally accurate.

[Dgizzi]

The closing company estimates the taxes based on the previous year and prorates for the closing settlement. Seller and Buyer sign a document that says if the actual taxes differ they will be re-prorated between the parties upon demand.

In my case the taxes were significantly higher than the estimate and the Seller owes me $2,000. I provided paperwork to my realtor, who forwarded to Seller's realtor who forwarded to Seller. I also contacted the Seller's ex- girlfriend and she spoke with him. However the Seller has not responded. It's been 9 months. Obviously he has no intention of reimbursing me for his share of the taxes.

The Seller is not a Florida resident but did buy another house in The Villages.

Just looking for opinions, advice, comments.
If this was written in the agreement and he signed it, you have a legal document and can take him court. First mention that and see if he pays. I bought a house in Ohio and it was in our paperwork all utilities were to be paid by her up to sale date. We find out a few weeks after that she hadn’t paid her sewer bills. City was going to make us pay. I was able to finally get a hold of her and said I have legal documents you signed, pay your bill or I will take you to court. I got a call the next day from the sewer co, she paid the bill

[Toymeister]

Nope, if the seller is a resident of a different state Florida has no jurisdiction over the seller.

Well I filed less than a week ago on the resident of another state so yes, I am correct. To boot the court agreed with me when I filed. It is where the event OCCURRED which is Florida.

[tsmall22204]

That's what attorneys are for.

[Skunky1]

You could also look at the title company that close the transaction. Apparently they don’t know how to do math. They can be held responsible.

[Leadbone1]

The closing company estimates the taxes based on the previous year and prorates for the closing settlement. Seller and Buyer sign a document that says if the actual taxes differ they will be re-prorated between the parties upon demand.

In my case the taxes were significantly higher than the estimate and the Seller owes me $2,000. I provided paperwork to my realtor, who forwarded to Seller's realtor who forwarded to Seller. I also contacted the Seller's ex- girlfriend and she spoke with him. However the Seller has not responded. It's been 9 months. Obviously he has no intention of reimbursing me for his share of the taxes.

The Seller is not a Florida resident but did buy another house in The Villages.

Just looking for opinions, advice, comments.

As a former realtor and someone who now closes home loans, it is the responsibility of the title company to keep enough taxes from the seller‘s proceeds to cover the amount needed. They typically will figure what they need and then add another 25% or even 50% to that just to cover a potential increase. This happened to me when I sold in Ohio to come to Florida. When I questioned this practice it was explained to me that since they can only estimate they like to take a cushion in case it’s more. It turned out my taxes were about the same, so a couple months after I got here, I received a refund on the amount that was held out for taxes. It sounds like your Issue is with the title company not the seller? I find it hard to believe that the title company estimate was off by $2000? Of course you do realize the sellers are only paying the taxes up to the day of closing. After that they become your responsibility and in many cases since you’ve probably paid more for the house, your taxes will be higher the next year. That has nothing to do with the seller. The title company may carry some sort of insurance to cover incidents like this?