Ask Me Help Desk - Overpaid property taxes

Hello: Here is my question. My wife and I purchased a house on contract with a payment of $850.00 per month for 2 years. The payments began on January 1st 2007. The payments included principle, interest, insurance and taxes. The taxes part is the most important information here. The taxes that were paid to the mortgage company during the 2007 year, (escrow for the year 2007) were $2763.00. However, after a whole new tax assessment was done in our county this year, the actual taxes for 2007 were set at $200.20 for the year. This was also partially due to our getting a mortgage exemption and homestead exemption on the property. Because the new tax rate wasn't given to us until September of this year, we have actually been paying the large payments almost all of this year also. Now, here is my question... the holder of the contract has kept the refund that was issued for the year 2007, and we are sure that they plan to keep the overpayment for this year also... using the excuse that they didn't charge us a down payment, they paid for a new roof, ( it was being done before we ever saw the house so it was part of the sale price. I want to file a lien against the property because it is actually still in their name, we just have a filed contract with the county offices and when the mortgage is settled, either by us purchasing the house, or by us ging up or selling the property, we will recover these overpaid taxes from their proceeds. Can I do this?
Thanks

First you need to read your contract. If your payment included other than principal and interest it has to be listed in the contract with either the amounts to be paid or how those amounts will be calculated.

How the contract is worded would dictate what action you take. You might be able to lower your monthly payments until the overage is made up. Or you may have to sue the seller for the overpayment. I'm not sure whether placing a lien is a good idea since you are buying the property.

I agree with Scott. The answers to your questions will basically be in your contract.

Also when you say "mortgage company" and "holder of the contract" who or what are you referring to? Is this a company, or a private individual, or what? I ask because you should be entitled to a statement of your escrow account. It will show how much you pay in each month that goes into "escrow", with a growing balance throughout the year. Then it will show deductions when taxes are paid and when insurance is paid. If there's a shortage, your payment increases to cover the shortage and prevent future shortages. If there's an overage, they should be giving you a refund. That's how "traditional" mortgages with an escrow account to cover taxes and insurance are set up.

I don't know of any way that you can file a lien against the property for this reason. Also, if the property is still in their name, how can you have a homestead exemption?. now that I think about it.

It might be time to talk to a real estate attorney. It sounds like there's definitely some funny business going on here, and it honestly doesn't sound like they're going to cough up the money without some sort of legal action, or the threat of legal action.

RM picked out some points I didn't consider. In a contract for sale, there is no mortgage. The payments are made to the seller. If you bought the property with a mortgage, then the property would have been transferred to your name and the mortgage processor would be sending you the escrow statement as RM said.

But since you mentioned a contract and that the seller got the refund because they are still listed as the owner, the other parts don't make sense.

Yes, I am confused, in a contract for deed, you don't have a mortgage, the land owner may but you don't actually own it yet ( the deed is still in the other persons name)

Also you can't get a homestead exemption on the property since the other person owns the property and you are living there,

So I don't know why they lowed the taxes?

Something just not right ?

Thanks everyone for your answers. I can see I have to do some more homework on this before I make a decision.
Thanks again everyone,
Michael

Quote:

Originally Posted by musicman2729

Thanks everyone for your answers. I can see I have to do some more homework on this before I make a decision.
Thanks again everyone,
Michael

Does this mean you don't have the answers to our questions, so you don't kinow whether you have a contract for sale or a mortgage or what?

You should be able to get that info quickly. When you do, come back and give us the facts so we can help further.