Property tax bill v. HUD-1 – Who owes the extra taxes?

Hey home buyer!

If you purchased a home in the past year or so, your property taxes for the home were probably prorated between you and the home seller.  The amount collected with be recorded on the HUD-1 Settlement Statement HUD-1 Settlement Statement you received at closing.

Also, probably both you and the Seller signed something at closing that if the property taxes were different, that the additional amount would be prorated between the two parties: Buyer & Seller.

Once you calculate the difference, the next step is to contact the Seller and request a prorated share of the higher taxes.  Go back to your closing paperwork and find the name and new address of the Seller.  If you don’t have it, you may contact the closing attorney where you settled the transaction and they may help by providing the Seller’s new contact information.

Be sure to write a nice letter with proper documentation and support (i.e., this year’s tax bill and page of the HUD-1 indicating amount of property tax collected from both the Buyer and Seller to calculate percentage owed by each party).  Or multiply the difference between what property tax was collected and what was paid by a ratio of the number of days Seller occupied home divided by 365 days.

I don’t know the statute of limitations on how far back you can go to collect the prorated share, or if anyone has done so besides one of my previous clients.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

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