What happens to the real property tax bill if the seller has not paid it prior to closing?

What happens to the real property tax bill if the seller has not paid it prior to closing?

• A. The escrow debits the seller and pays the entire amount at closing.
• B. The seller must pay all taxes before the closing date.
• C. The tax bill is prorated between the buyer and seller.
• D. No payment is needed until after closing.

Answer: (A)

When the seller has not paid the real property tax bill prior to closing, the typical procedure involves the escrow company debiting the seller's account for the amount due and ensuring that the tax bill is paid in full at the time of closing. This ensures that the property is transferred to the buyer without any outstanding tax liabilities, thus protecting the buyer from future claims or liens related to unpaid property taxes. The practice of debiting the seller’s account aligns with customary practices in real estate transactions, where all outstanding obligations, including taxes, are settled at closing to provide a clear title to the buyer. By paying this amount from the seller's proceeds at closing, the transaction ensures that the local taxing authority receives what is owed, thereby mitigating the potential for complications that could arise from unpaid taxes. Understanding this operational dynamic is crucial for both buyers and sellers, as it helps clarify how financial responsibilities are handled in real transactions and prevents future disputes related to property tax obligations.

When the seller has not paid the real property tax bill prior to closing, the typical procedure involves the escrow company debiting the seller's account for the amount due and ensuring that the tax bill is paid in full at the time of closing. This ensures that the property is transferred to the buyer without any outstanding tax liabilities, thus protecting the buyer from future claims or liens related to unpaid property taxes.

The practice of debiting the seller’s account aligns with customary practices in real estate transactions, where all outstanding obligations, including taxes, are settled at closing to provide a clear title to the buyer. By paying this amount from the seller's proceeds at closing, the transaction ensures that the local taxing authority receives what is owed, thereby mitigating the potential for complications that could arise from unpaid taxes.

Understanding this operational dynamic is crucial for both buyers and sellers, as it helps clarify how financial responsibilities are handled in real transactions and prevents future disputes related to property tax obligations.