Property tax credit after purchasing

4 Replies

Hi everyone, Investor here from Canada, i just had a quick question regarding a situation i have; we purchased a house last June-July and moved in at that time. Everything went well, at that time the seller had paid their property taxes in full, and as usual when we were completing the transaction the notary or lawyer calculated the pro rated amount of taxes that we owed to the seller based on how many months were left in the year. The problem is that the seller was trying to sell the house for over a year and they weren't able to sell it for an amount close to the city evaluation, so they ended up applying to modify the home value in the city's books (assessed home evalution) so their yearly taxes would be less. Then a couple months after we moved in, we received a letter addressed to us the new homeowners from the city saying that they had re-evaluated the home value and lowered it to a certain amount which ended up lowering that year's taxes by about $1000. That $1000 could either be refunded to us or credited on the next tax bill which we chose to do the credit. about a month later the lawyer who completed our transaction sends us an email saying the sellers lawyer knows that we ended up getting a tax credit and that it is owed to the sellers, and that they would take legal action if we didn't refund it. basically my question is how does this usually work out, are they entitled only to a prorated amount of it, are they even entitled to any of it? I don't mind paying them what is owed to them, but I don't really feel they should have all of it. On the one hand you can see that on the day the transaction was completed they got all The money that was due to them based on the facts of that point, going forward they are not the owners of the house anymore so if we got a tax credit or a tax increase it does not really concern them, on the other hand you could say that they took the effort to do this and since that credit was applied to the year they sold the house they should have a prorated amount based on the months they lived in this house. The second question is why didn't the sellers lawyer contact us directly, as the lawyer we used for the transaction is not really working for us on a regular basis and is not our regular counsellor. Will she be charging us fees normally to be dealing with this? unfortunately it's a case of sellers remorse, where the seller doesn't really sell for the amount someone had put in their head that their house was worth, I think it's taking it pretty far to threaten to take legal action, what do you guys think we should do? Have you been in this situation before? I know this is not necessarily an investing question but it could've happened for an investment property. thank you all in advance for your help, it's really appreciated

I would talk to my attorney about this for sure.  If you want to go it alone,  I would ignore the letter for now to see if the attorney escalates.  They often send letters like to this to fish for payment without legal grounds.  

However, if the evaluation was lowered, I would refund the previous owner for the time period it was lowered while he owned it.   I would communicate directly to the previous owner verbally.  Not through his attorney or by email.

Best of Luck!


I agree with @Chris Sellers I would ignore and tell your attorney not to worry about it, and you didn’t ask him to represent you. Down here it would have to be a petty little turd to actually sue you for such a small sum. Probably bluffing. And if not just pay the money. I would skip the attorney as that only buys you three hours anyway.

Good luck

The seller Is owed the reduced amount appropriate for the period during which He owned. You signed documents at closing agreeing to this. You get the benefit of the reduced taxes during the time You owned it.
Do the math, cut the check.

Thank you all for your quick replies !! i really appreciate it. I talked to the lawyer that did our transaction and she said there would be no fees, she wants to clear things with the seller and us so we don't end on bad terms. I sent her copies of the refund/credit and basically explained to her what you all said, that we would split it based on the time they owned the home, still waiting for her to get back to me, i will keep you guys posted!

Thanks again :-)

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