Title Topics: Let’s Talk about Property Taxes

Posted by Amrock

title-topics-logo-%282%29When refinancing or purchasing a new home, one of the items
that a title company researches are the property taxes.  Although every homeowner pays property taxes
across the county, determining your specific property taxes has many variables.  These variables coincide with different
aspects of your home’s location and your home’s assessed value.   Depending on the taxing authority, your
taxes could be determined by the city, county, school district or by all three.
When you pay property tax each year, you’re paying for necessities that are
provided by the city, such as police and fire department services, garbage
pickup and snow removal.

How are my property
taxes determined?
The amount of your property taxes is determined by the
assessed value of your home.   When the market
is healthy, home value increases and taxes do as well.
When are my property
taxes due?
Depending on your taxing authority, your property taxes
might be due annually, semi-annually or tri-annually.  To find out, contact your taxing authority.
What happens if I
forget to make a payment?
Just like many other collectors, there will be a monetary
tax penalty for missed payments.  Depending
on how many payments are missed or how long the taxes are delinquent, you could
end up with a tax lien on your property.
Tax liens are imposed on property by law to secure payment of taxes. A
tax lien may be imposed for delinquent taxes owed on a property, or as a result
of failure to pay other taxes as well. While personal debt follows you wherever
you go, tax liens on real estate stay with the real estate. The property owner
becomes responsible for payment even if the tax delinquency was incurred by a
prior owner. Tax liens can by paid in a variety of methods, even through an
escrow account. Though procedures vary from state to state, there are usually
several notices in addition to a fairly lengthy period of time before the
property is seized and sold at a tax lien sale.
Does my lender pay my
Typically, you will pay property taxes into an escrow
account (unless you request an escrow waiver) and your lender will forward the
payment to your local taxing authority when it comes due. Property taxes and
the interest you pay on your mortgage are usually tax-deductible.
During a refinance,
will the prior lender or the new lender pay my taxes?
This question is commonly asked by clients when they are in
process of refinancing.  The answer is
that it depends, but we’ll break it down and explain it as simple as
possible:  If the prior lender already
sent out the escrow payment for taxes due but the payment is outstanding with
the taxing authority, the new lender might still collect for taxes at
closing.  Consequently, when the prior
lender’s payment is applied, the new lender will refund the client or reserve
it in the escrow.
As a national title
agency, how does Title Source determine each homeowner’s taxes in thousands of
different cities?
Title Source is the largest independent provider of title
insurance, property valuations, and settlement services in the nation.  We have the necessary resources and an
in-house database that provides us the taxing authorities’ information for
different states, cities, and counties.  Once
we receive the property’s Parcel ID in a title order, we call the taxing authority
to verify the property taxes.
What is a Parcel ID
Each property has a unique identification number called a
Parcel ID and it is a numbering system that the taxing authority uses to keep
track of properties and the corresponding taxes.  The Parcel ID number identifies the property’s
municipality, section or township range, the subdivision code, the block and
lot numbers.   A parcel ID number can also be known as the
property identification number (PIN), Assessor’s parcel number (APN), or
Assessor’s identification number (AIN).  The
Parcel ID number can be found on the property tax bill and usually in the legal
description of the subject property.


Any questions or comments?
Please let us know!