Prepaid Property Taxes...We are buying in LA county and were told by our banker that we will not have to

Asked by Magdalena, 98101 Thu Mar 27, 2008

prepay any property taxes at closing, because we are not required to have an impound account. We just received the HUD1 yesterday (supposed to close today) and see we are expected to bring ~$700 to closing to repay the seller for taxes they paid through June. I understand that we would be paying it anyway, but I'm frustrated that we have to pay it at closing because:
a.) we were told we wouldn't have to
b.) we were very meticulous about calculating closing costs and deliberating whether or not to buy an extra point based on the fact that we wanted to use the seller's credit. now that there is this 'surprise' cost, we wish we hadn't bought the extra point.

Do we have to repay the property taxes? Can't the county repay the seller and we will pay them ourselves when due?

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Magdalena, Home Buyer, 98101
Thu Mar 27, 2008
I understand the principle of ownership; thanks for the simpleton explanation. I'm extremely frustrated with the incompetence of so-called 'professionals'. If you are a buyer that actually reads all the paperwork, researches mortgages, follows interest rates and understands each line item on the GFE or HUD1... and then catch these professionals in a mistake/mispeak, it is 'you' that is wrong. I asked the escrow person, the real estate agent and the banker "what other costs will we see at closing?" and not one person brought up this issue. We bought points based on this information and now have to go back and re-write the loan at the last minute. This is all on top of an insurance mess -- our insurance agent lied to our banker about the 100% coverage issue to placate him and never told us that we would be charged double at closing. Again, no integrity, no professionalism. Perhaps they don't expect buyers to actually think and question during this process...?
2 votes
Dot Chance, Agent, Burbank, CA
Thu Mar 27, 2008
Hi, Magdalena. I understand your frustration. I hate to bring this up but you will probably also receive a supplemental tax bill in addition to your prepaid taxes...

You usually do have to prepay the taxes. Didn't the escrow company, your loan officer or your agent give you an estimate of what you would need to bring to the table? I know when you are not counting on coming up with that kind of money it is frustrating!
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0 votes
Laarni G. Om…, , Orange County, CA
Thu Mar 27, 2008
Hi Magdalena,

You are not repaying the property taxes for the seller. You are paying for your "portion" of the tax from the time the property is recorded in your name until it becomes due again in November. From an agent's perspective, I always advice my client to allow some funds from some unexpected costs especially if you "shopped" around for your own lender since there are times that there are items not included in your estimated closing costs. I don't think you've received the HUD1 as yet if you have not closed escrow- what you received is the estimated HUD1 which has some allowances in them including escrow pad which ,if not used, will be returned to you. Buying a house is a learning curve and you will look at this as a learning experience. Enjoy your new home!
0 votes
J.D. "Dan" &…, Agent, Orange Park, FL
Thu Mar 27, 2008
I hope I unconfuse you a little more. Up until today the Seller has owned the property so they pay the property taxes though yesterday. Today you will own the property so you pay the taxes from today through June. Since the seller prepaid the taxes they are given a refund for the unused portion.

I hope that simplified things for you,

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0 votes
Monique and…, Agent, Beverly Hills, CA
Thu Mar 27, 2008
Hello Magdalena,

Your banker informed you that you would not have to prepay any property taxes.The seller paid are not prepaid as they were already due. I know it's complicated but they paid them up to June so you will have to pay them back (repay) but this is different then having your taxes in an impound account as the taxes were already due through June.

I know it's frustrating but the costs of purchasing a home can be quite complicated. It's always good to set asside a little for "surprise" costs. The county isn't one to issue refunds.
Congrats on your new home.

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