I'm looking for some advice on what I need to do regarding this issue:
I bought a rental property on August 7, 2017. Today I received a call from my title company stating that the sellers hired an attorney because they felt that the property tax prorations were not calculated correctly. The attorney calculated that they were shorted $1346.60 and sent a letter to the Title company. The title company wrote a check to the sellers and then called me and said that I need to send them a check for that amount.
They sent me the letter from the seller's attorney as proof. I don't feel that I should just blindly write them a check based upon what the seller's attorney said they were shorted. I have no idea if this calculation is correct. Should I be taking this to my attorney and have them deal with the title company?
Anyone ever had this happen? What would you do?
easy...first calculate the daily tax due and then calculate how much tax you owe for the rest of the year..the rest is owed by the seller to you. take tne annual amount, divide by 365..multiply times the number of days you own the property this year--subtract from annual tax bill...the balance is what they owe
@John Thedford . Thanks for the reply. I'm not sure I'm following you. The sellers claimed that the title company shorted them at closing. The title company wrote a check to the sellers for the "shorted amount" and now the Title company wants me to pay them back for that money.
it is not common but not unheard of a company making a mistake Somewhere in your paperwork there might be a phrase of assisting escrow company for errors in settlement. I would have the escrow company send you an explanation with the corrected prorations. and how they derived the calculations. Really no need for an attorney
Look at the closing docs...calculate the amounts due...it will be easy to see if they make a mistake.
BTW--if they sent a check to the seller, odds are it was owed. I am sure they checked their prorations before they sent the seller a check.
Like @John Thedford said just calculate the amount of taxes the seller would owe, and you would owe to see if the proration was correct at not. If you owe the seller the amount that the title company paid them, then you will need to reimburse the title company. One of the documents you sign at closing typically is a form that says if there were any errors, you will rectify them in the future.
If you are trying to stall and figure things out you can always make them show you where it says you must pay in writing. I don't know your closing docs, but chances are somethings in there and they quote it to you... then you can send to your attorney or just pay it.
Thanks for the replies everyone. I'm a little skeptical when someone calls me asking me to send them a large check :). I'll check my closing documents when I get home and run the calculations. Once I figure that out I'll contact the title company .
Ask the title company to provide details as to the incorrect charges. They should be able to explain to you what was done incorrectly.
I agree with others, you're probably on the hook for it as long as it's valid - but I wouldn't just blindly trust. Let them explain it to you in a way you understand.
no one got sued, it was just a miscalculation and it happens. Do as everyone else said and balance the closing docs. It happens.
@David Zheng . Thanks for the reply . When the title company called it sounded like they were sued by the sellers. I'm not 100% sure. Either way I'm working on resolving this.
This does happen. Often because the wrong box is checked or the wrong number entered in the title company software, but sometimes when title gets bad info from a third party such as a clerk, HOA office, tax office, etc.
It's always interesting when one of the parties involved in such a deal says "That's the title company's problem!"
We point them to the sales contract where they agreed to pay their prorata share of the item. Then we show them the signed addendum to the CD/HUD-1 which indicates that any errors in the figures will ultimately be borne by the responsible party.