In Colorado, real property taxes are paid in arrears, meaning that you will pay the 2016 taxes in 2017. Depending on the date of your closing, and whether a lender is making tax payments, there are several different scenarios to consider.
Payment of 2016 Taxes Upon Home Sale:
At the beginning of 2017 each county treasurer is busy certifying the tax bill for 2016. Once certified, the 2016 taxes can be paid all at once (by April 30, 2017), or in two installments: the first half due on February 28, 2017 and the second half due on June 15, 2017. Once the taxes are certified by the county, the payment of those taxes at closing is routine: First Alliance will collect from the seller the full amount of taxes due for 2016 and disburse the check to the county treasurer.
Payment of 2016 Taxes Early in 2017:
Early in the year (January and early February), not all of the county treasurers will have “certified” the final 2016 tax bill. To make sure the property taxes for 2016 are paid, First Alliance will escrow 110% of the un-certified amount. Those funds will be held until the county certifies the final tax bill. First Alliance will then pay the bill from the escrow and refund the balance to the seller.
What Happens When the Lender has Disbursed the Tax Payment?
With most mortgage loans, the lender disburses tax payments from the borrower’s escrow account. When the closing takes place at the beginning of the year, the lender’s payoff statement might show that the lender has sent the tax payment to the county, but the county may not yet show receipt of that payment. When this happens First Alliance will normally collect the tax payment escrow at closing and then reimburse the payment to the borrower once the county treasurer shows receipt of payment from the lender. This procedure protects against delinquent taxes and tax liens.