I received a question about taxes and a closing in AZ and thought I would share.
QUESTION:
| We are closing on our home on March 15th. We have not yet paid (cash) the 2nd half of the 2012 taxes. Will they collect the 2nd half, plus January, February and 1/2 of March in escrow |
ANSWER:
If you are the Seller here is my answer:
If the Seller is closing on March 15th and the Buyer is paying “cash” Escrow will collect 2nd ½ 2012 taxes from the Seller and pay them to the county at the time of closing. Escrow will then prorate from 1/1/13 to 3/15/13 crediting the Buyer and debiting the Seller for the time frame of the 2013 year that the Seller owned the property. Then when the 1st ½ 2013 tax bill comes out to the Buyer the Seller will have already reimbursed the Buyer at the time of closing for the portion of the year that they owned the property.
If the Buyer is obtaining a new loan and the Buyers new lender is collecting for taxes and insurance through an “impound/escrow account” and the lender wants to pay the 2nd ½ 2012 taxes through this account the new lender will collect from the Buyer 7-8 months taxes at the time of closing. Escrow will then not pay the 2nd ½ taxes from the Seller as the lender is wanting to pay the taxes. In the case Escrow will then prorate from 7/1/2012 to 3/15/2013 crediting the Buyer and debiting the Seller for the time frame of 2012 & 2013 that the Seller owned the property.
If the Buyers new lender is going to only collect 2 months taxes upfront they will require Escrow to pay the 2nd ½ taxes from the Sellers proceeds and prorate from 1/1/2013 to 3/15/2013 crediting the Buyer and debiting the Seller for the time frame of the 2013 year that the Seller owned the property
There are many different ways to handle the taxes for certain times of the year and depending on the type of transaction.
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