Is it common to reimburse a home seller for overpaid taxes?

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Is it common to reimburse a home seller for overpaid taxes?

I recently purchased a house and at the time of closing the seller paid me a prorated amount for taxes for the months he owned the house. The seller has now approached me requesting I refund him nearly $500 because the taxes due are less than what we had estimated. This is my first house to own so I am not sure if this is correct or if what happens at closing is set in stone.

Asked on February 1, 2012 under Real Estate Law, Texas

Answers:

Joseph Gasparrini

Answered 9 years ago | Contributor

In your question you mention that at the closing an estimate of the future tax bill was made, and a pro-ration was done based on that estimate.  Also, based on your question it seems that no agreement was made, nor was there any discussion at the closing about whether a refund would be made if the tax bill later showed that the seller overpaid you.  If you ask, on a purely legal basis, "Am I you legally obligated to refund the money?"  that question might depend on some technical language in the contract.  It is possible that the wording of the contract requires that you give a refund of an overpayment of this type.  The opposite is also possible - the contract might prohibit either party from demanding a refund post-closing.  It may be that the only way to know if there is a legal obligation to reimburse would be if the seller took this case to court and a judge made a decision.  Since you have the overpayment, and the seller is seeking to get money from you, he is the one who would have to take it to court.  If that happens, you should keep in mind that in small claims court, which is where this size of case would be filed, the judges usually attempt to do the fair thing, rather than turn someone away based on legal technicality.  If, in fact, you really received an overpayment at the closing, in my opinion the fair and honorable thing to do would be to refund it to the seller.  I also think it would be preferable to do that than to end up in court, which will consume time and money; and may result in a ruling against you. 


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