Maine real estate buyers and sellers and their respective bankers and lawyers crowd around a conference table for the closing on a property. The seller's lawyer shows the check cut for the town the real estate is in, so the town office can credit the pro-ration of the property tax to the seller. Or what the seller would have owed for his/her/their share of the taxes is credited on the HUD 1 statement and it all depends on the time of year of the closing and whether tax bills have been mailed out. The warning to the buyer that if you don't get a tax bill by the end of July or when the seller says they traditionally come out in that town, go looking for the town assessor/manager to let them know you are the record owner, and don't want a lien put on the property for lack of payment. The record owner as of April 1st is who the town or plantation or state mails the bill to. It is not the municipality's job to search the world to find the new owner. And unless you can show you were overseas fighting in a US led conflict or war, the taxes are due and no grace period or special situation exists to delay the payment.
What happens if the buyer nods, everyone shakes hands and the closing is completed with keys passed across the table and everyone bee lines for the parking lot to get on with their lives but the taxes are NOT paid down the road? What if the taxes are not escrowed monthly in the purchaser's payment along with insurance if there is a building involved as collateral? The buyer does not join a tax club to pay them in installments to avoid the big payment all at once annually? Oh oh. For starters, the seller's name...the record owner if the property was conveyed before April 1st is spotlighted in the town report of delinquent non tax-payers. That is bad enough, but it also affects the SELLER'S credit rating...reflecting on non-payment of taxes in their name. Getting the credit restored in not easy according to Houlton town assessor Laureen Bither that I talked with this week. Hodgdon's Cheryl Cameron echoed Bither's claim and said all assessor's back and fresh from last week's Maine Tax Assessor Workshop are spreading the world around "Vacationland" about the 123rd's legislature's new law 687 . It provides that if a buyer knowingly fails to pay the prorated tax for the current year (or the tax for the coming year that has been assessed to the seller where the sale occurred after April 1) and the municipality places a lien, here is what can happen. If the seller pays the delinquent property tax in question, the seller may then recover in a civil action from the party who did not pay the taxes as agreed upon, the delinquent tax, the interest charged, the placement and removal lien costs in the registry of deeds and reasonable attorney fees. Further the record of the lien that has been recorded in the seller's file with the consumer credit reporting agency must be considered inaccurate information if the seller submits to the reporting agency a copy of the court judgement and proof of payment of the property taxes in question.
Also, from a Maine real estate broker's perspective, do you want calls five months later from an angry seller saying how come my name is in the town report, how come I got a higher interest rate for my home equity loan due to a lower credit score because of a property lien, and how come I the seller have to pay the cost of the buyer's taxes and take civil action to recover my debts and go thru this frustration? Having your neighbors and family think you are struggling and missed your tax payment is a big big issue for most. A good citizen is responsible, pays taxes, gives something back to make their town, city and makes it a better place to live. Check out public law 687 "An Act To Protect Parties To Real Estate Transactions" and make buyers, sellers, attorneys and banks know about it to save wasted calls, explanations and hard feelings after the closing. What if the buyer can not pay the tax at the closing or says I would rather wait until they are due and assessed? Get the lawyers and bank involved and when you get the call when the closing happened months ago, remind them that you brought up the point, it was covered in detail and you even had both parties sign a form acknowledging knowledge of Law 687 and quickly refer them to the lender, the lawyers. Then you the broker can do something productive instead of wasting a morning chasing down the buyer, faxing HUD 1's and contacting attorneys, bankers to reexplain what led up to this crisis and what should have happened but did not. Find out more on the law that helps protects your credit rating in Maine. As a professional broker, you try to eliminate conflicts because despite your best job to avoid them, when they happen, someone is not happy. And you are involved in the screw up and become part of the problem.