5 On Your Side

Property-Tax Dilemma Leaves Home Seller With Hefty Bill

Posted May 3, 2006

— When a homeowner closes on a house, the seller usually pays the buyer his portion of the taxes at closing with the idea the buyer then pays the taxes when they are due. However, the way the law works now, if the buyer does not pay the taxes as promised, the seller is responsible.

Thousands of homes are bought and sold every year. Mike Price sold his home more than a year ago.

"I didn't think anything else about it until a couple of weeks ago," he said.

Price's father, who co-signed when Price bought the house, got a letter from the Wake County Department of Revenue. It threatened wage garnishment if last year's property taxes and late fees were not paid. The total amount due was $1,070.

"I was shocked," he said. "I sold the house. I don't own it anymore. Why do I owe taxes for something I don't own?"

Price called the county and found out since the new owner did not pay the taxes, Price is responsible. Under the law, no matter what, taxes fall back on whoever owned the house on Jan. 1 of the tax year, even if they sold it Jan. 2.

"When they explained it to me, I thought, 'That's got to be one of the dumbest things I've ever heard," he said.

Price paid the taxes, and now wants the buyer to pay. He also wants something done to keep this from happening in the first place. He said it is simple.

"At closing of the house, I know they have to file all kinds of paperwork. Why doesn't the name on the taxes also change?" he said.

Emmett Curl, who heads Wake County's Revenue Department, agrees with that idea. He said on average, 3,200 buyers a year do not pay their taxes, leaving sellers holding the bills. He supports a proposal that, if adopted, would change the law.

"We will start tracking the new owner and the statutes will allow us to make the new owner responsible and take the legal action immediately against the new owner rather than have to deal at all with the old owner," he said.

However, it is already too late for Price. Only the new owner can help him. When Five On Your Side tried to get ahold of the new owner of Price's home, we were told the taxes were not paid because the owner had been out of the country, and that he plans to pay. If he does not, Price said he will take him to small claims court.

The bill that would change the law will likely be introduced early in the upcoming legislative session that begins next week.


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