Here are a few things to remember:
By law, whoever owns a property on January 1 of each year is responsible for that year's property taxes.
- If the property is sold later in the year, it is possible for the January 1 owner to transfer the liability for the payment of property taxes to the new owner. This can be done through a purchase agreement or other form of contract and is usually handled at the closing.
- The tax commissioner does not prorate taxes between buyer and seller. This should be handled at the closing as well.
- The tax commissioner is required to send a bill to whoever owned the property on January 1 and also to the new owner if the property was sold later that year.
- If the taxes for the year in which the property was sold go unpaid, a tax lien is issued against the property. The tax lien will also be filed in the name of the January 1 owner unless they provide proof of the sale of the property (warranty deed) and proof of the transfer of the tax liability (closing papers or contract) within 90 days of the tax payment due date.
- The document required as proof of transfer of tax liability is generally called an "Acknowledgment and Receipt of Settlement Statement." This document may state that the taxes were prorated based on the estimated amounts prior to the release or receipt of the actual tax bill. It also may indicate who is responsible for any outstanding taxes not paid at closing.
- If proof of the transfer of property and tax liability is provided within 90 days of the tax payment due date, the tax lien will be filed in the name of the new owner. For more information about tax liens, click here.