QUESTION: Have you ever had a client (usually a seller) argue with you or the closing attorney about the tax prorations on their closing disclosure? Sometimes, sellers decide that the prorations calculated by the closing attorney are wrong and should not be determined on a calendar year basis. Is this because they called the tax office or looked at a website which reflected that property taxes are assessed on the fiscal year? Clients often argue about this even when directed to N.C.G.S. 39-60.
ANSWER: Of course you have!!
WHAT DO YOU DO? Well, now¸ thanks to collaboration of a multitude of groups, spearheaded by the Real Estate Lawyers Association of North Carolina (or RELANC), and including the NC Bar Association Real Property Section, the NC Land Title Association, the North Carolina Association of Assessing Officers, and the North Carolina Tax Collectors Association, Inc., you can print, email or even purchase glossy tri-fold brochures that outline at a very basic level the tax prorations as historically contracted in this state. Go to https://relanc.com/newsletters/ (link and order form) and https://relanc.com/wp-content/uploads/2019/07/Tax-Proration-Brochure-2019.pdf (the brochure).
Of course, a working familiarity with North Carolina General Statutes Chapter 105, Subchapter II, is crucial for the closing attorney and his or her staff. North Carolina has a lot of special circumstances — deferrals, exemptions, exclusions and special use valuations. All require special attention by the closing attorney in coordination with the local tax offices to assure the correct listing, valuation and recaptures are applied. And all are often misunderstood by sellers and buyers, both in how they apply and in the requisite process for compliance!
Clients should discuss tax proration with their attorney but sometimes they complain that the real estate broker should have explained it better. The tax proration brochure now provides a handy tool for brokers wanting to deliver accurate information to sellers and buyers.