PropertyTax Estimate Error At Closing

[ripcord313]

What is the name of your state? Texas

We closed on a house and the property taxes for 2006 where estimated based on the 2005 taxes paid by the Title company because the 2006 bill was not in. The owner paid 75% of the estimated taxes and we paid the remaining 25% for 2006 (sale occured in late September).

During 2006 the house did not have a Homestead Exemption as it did in 2005 and taxes are about 25% higher for 2006 because of it.

At Closing the tax amount was not known and was only estimated basedon 2005, now that I have the actual bill does the previous owner owe me 75% of the difference between estimated and actual Property Taaxes for 2006?

I talked to the previous owner and they told me "thats the way things work". Do I have a legal leg to stand on?

[efflandt]

What you signed is what you agreed to. It is not the previous owner's fault that you did not buy it as your primary residence and no longer get homestead exemption. At least if you are an investor (rather than a one shot deal as a winter home) you learned another expense you need to consider when making an offer.

[lcannister]

Check your documentation you MIGHT find the answer there is this is covered. An Atty could have made sure that the estimate was closer based on your usage or total lack of homestead knowledge.

How much money are you talking?

[nextwife]

Originally Posted by lcannister

Check your documentation you MIGHT find the answer there is this is covered. An Atty could have made sure that the estimate was closer based on your usage or total lack of homestead knowledge.

How much money are you talking?

Check your offer to purchase, the preprinted language, or any revisions to that, specify how prorations shall be calculated. UNless there is a provison to correct any actual discrepancies once the bill arrives, the proration done at closing, in accordance to YOUR offer, is the proration you musty now live with.

If a calculation ERROR occured, in that the calculation was not done in accordance with your offer and they just somehow ran the numbers wrong, THEN you may have recourse with the closing agent.

It is very rare that any rejiggering of tax proration credits is done once closing is past. Normally, what you get at closing stands, if figured in accordance with the offer.

[ripcord313]

Here is the language from the Contract and Closing Settlement:

Article 13 on page 5 of the signed contract (TREC NO. 20-6) states "Taxes for the current year, interest, maintenance fees, assesments, dues and rents will be prorated through the closing date. If taxes for the current year vary from the amount prorated at closing, the parties shall adjust the prorations when tax statements for the current year are available."

Also page three of the signed Settlement Statement states "The Seller's and Borrower's signatures hereon acknowledge their approval and signify their understanding that tax and insurance prorations and reserves are based on figures for the preceding year or supplied by others or estimated for the current year, and in the event of any change for the current year, all necesary adjustments will be made between Borrower and Seller directly."

[ripcord313]

Also maybe I wasnt clear, it wasnt a calculation error. It was just that the estimated tax was about $1200 under the actual amount and I want them to pay $900 of that $1200 since they owned the house for 9 months of the year. I have signed contracts that say I can seek adjustments from the previous owner if there is a difference.

[ripcord313]

Originally Posted by efflandt

What you signed is what you agreed to. It is not the previous owner's fault that you did not buy it as your primary residence and no longer get homestead exemption. At least if you are an investor (rather than a one shot deal as a winter home) you learned another expense you need to consider when making an offer.

The previous owners of this house owned two properties for 2006 and usd their homestead exemption on the other property. That is why there was no homestead exemption for 2006 on the house. In Texas you cant file for a homestead exemption if you did not live in the house on Jan 1 2006 (we closed on Sep 30 2006) so we dont fit the criteria. I am just looking for them to pay for taxes when they owned the house (Jan 1 thru Sep 29) based on the actual number not some understated estimate based on the previous year when the house had a homestead exemption.

[nextwife]

Originally Posted by ripcord313

Also maybe I wasnt clear, it wasnt a calculation error. It was just that the estimated tax was about $1200 under the actual amount and I want them to pay $900 of that $1200 since they owned the house for 9 months of the year. I have signed contracts that say I can seek adjustments from the previous owner if there is a difference.

Again, WAS THE CLOSING STATEMENT calculated in accordance with the terms of YOUR offer puchase? Normally, the property tax credit given to the buyer on the closing statement is calculated based upon the terms in YOUR offer. What was the closing cost proration that was shown as a credit to you on the closing statement?

So, pull out your closing statement and calculate the property tax prorations - are they consistant with the terms in your offer??????

WAS a provision placed in your offer to provide an adjustment to the proration after the actual amount was established?

[ripcord313]

Originally Posted by nextwife

WAS a provision placed in your offer to provide an adjustment to the proration after the actual amount was established?

Here is the language from the Contract and Closing Settlement:

Article 13 on page 5 of the signed contract (TREC NO. 20-6) states "Taxes for the current year, interest, maintenance fees, assesments, dues and rents will be prorated through the closing date. If taxes for the current year vary from the amount prorated at closing, the parties shall adjust the prorations when tax statements for the current year are available."

Also page three of the signed Settlement Statement states "The Seller's and Borrower's signatures hereon acknowledge their approval and signify their understanding that tax and insurance prorations and reserves are based on figures for the preceding year or supplied by others or estimated for the current year, and in the event of any change for the current year, all necesary adjustments will be made between Borrower and Seller directly."[/