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TJ, Esq.
TJ, Esq., Attorney
Category: Real Estate Law
Satisfied Customers: 12204
Experience:  JD, MBA
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This question deals with calculating a refund of real estate

Customer Question

this question deals with calculating a refund of real estate taxes from a buyer when purcahsing a hose. My closing date is Sept. 29 on the house I am buying in CA. I will get a credit at closing for the taxes that I will pay for the byuer from July 1 to Sept. 29. The tax credit credit is calculated as follows 5250*88/180. where $5250 is a tax for half of 2016.A few question:
1) why do they use 180 days in the formula and not 183 (number of days in half a year for this leap year).
2) Why do they use 88 in the formula while it would be 90 days from July 1 to Sept 29 (date of closing). Am I correct on including Sept. 29 in this calculations or it should be Sept. 28 the day before closing.
3) It is sated on the county website that the taxes are expected to be increased by 2% when the new tax bill is issued in in November for the taxes starting from July 1, 2016. Why in the above calculations $5250 is also NOT increased by 2%?
Submitted: 10 months ago.
Category: Real Estate Law
Expert:  Irwin Law replied 9 months ago.

Just for clarification purposes, you said: I will get a credit at closing for the taxes that I will pay for the byuer... Don't you mean pay for the seller?

With regard to your questions, 1) tax prorations are done by the computer not individuals, so it depends on how the computer is programmed. I would have multiplied the half-year taxes by two and divided by 365 to set the per diem rate; 2) it should be the exact number of days, and it is calculated through the date of closing. But again, I don't know how the computer was programmed; 3) if it is actually no that the increase will take place, then it should be figured into the pro-ration. You can bring these things to the attention of the escrow/title agent who was closing. You must be careful because causing changes in the closing figures at the last minute, may (under new federal rules) cause a postponement of the closing for new notices to be sent to the parties.

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Customer: replied 9 months ago.
it is eller. I would think there is some kind of regualtion in a state like California how this proration needs to be done -- can you find one -- I do not think think title company can just syay "this is what the computer tells me".The question regarding the tax increase -- the bill will be issued in November but the county says it is EXPECTED to be increase by 2%. Can you rely on this language to ask for 2% (I think there is a law in CA on how much it can go up). Also if the title company is wrong -- I inderstand that they have to eat it-- as it is their fault in not calculating properly the credits. Regardless of the title fault. Yes the closing is on 9/29 and if f the correction is made on 9/26 -- doe it fall within 3 days. Or if the title company would come up with the difference --then 3 days would not apply??
Expert:  Irwin Law replied 9 months ago.

Sorry for the delay. I've had computer problems all afternoon. I do not believe the California law plays a part any longer. The TILA-RESPA Integrated Disclosure (TRID) rules took effect October 3, 2015, introducing new disclosure forms, calculations, concepts, and requirements for all mortgage transactions. My understanding is that the closing numbers are now the responsibility of the lenders, not the title companies. I do not know that there is any local control over computation of tax proration. I doubt that there is, because everything regarding mortgage lending has now been taken over by the federal government. Local real estate industry has been completely removed due to lack of trust in individual Americans to perform anything in a trustworthy and legal fashion. It appears that we are headed for the day when all residential real estate closings will be conducted by a federal government official. You will have to check with your own lender and title company closers on that aspect. I would be very surprised if HUD has not handed down very precise instructions on how tax prorations are to be computed. Good luck getting through the closing on the 29th. Let me know how it goes.

Customer: replied 9 months ago.
right and I am looking for this instructions - can you find one - -as this was the intent of my question to start with. I Contacting title company and asking their advise is pretty much useless and this is whty I am asking and paying for questions on justanswer. I do not think any of my questions were answered -- if you cannot find an answer - would you please opt out. thank you.
Expert:  Irwin Law replied 9 months ago.

Okay. Since I believe that you are searching for something that probably doesn't exist I'll step out.

Expert:  TJ, Esq. replied 9 months ago.

Hello and thank you for the opportunity to assist you. My name is TJ. The other attorney opted out, so I will try to help if you still need it. I believe that I can explain the situation to you. Please let me know.

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