4 Things to Check Before You Pay Your Property Tax Bill

Your property tax bill shows up, you see the number, and you sit down to write the check. Before you do, there are four things worth checking, because paying that bill without looking can mean paying it twice, or paying taxes on property that was never yours.

Confirm whether your lender is already paying it out of escrow. If you bought this year, check how taxes were handled at closing. Read the bill for special assessments and changes in your assessed value. And make sure the only parcel on that bill is yours.

In the video below, North Carolina attorney Tiffany Webber walks through all four, including the agent who discovered his lender had been collecting taxes for several lots that were not his.

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1. Is the Bill Even Yours to Pay?

The bill showed up with your name on it, so writing the check feels obvious. If you have a loan on your home, there is a good chance you do not pay your property taxes directly at all.

Most of the time with a mortgage, your lender requires you to escrow taxes and insurance. An escrow account is basically a forced savings account. A piece of your taxes and insurance is built into your monthly payment, the lender collects it, holds it, and pays the tax bill when it comes due.

They do not do that to be nice. If property taxes go unpaid, that can turn into a tax lien, a legal claim against the home for the money owed, and a tax lien can jump ahead of the lender mortgage in line to get paid. The lender would much rather collect from you monthly and pay it themselves.

Here in North Carolina you are entitled to a copy of your tax bill even when your taxes are escrowed, so the bill arrives in the mail whether you pay it directly or not. Write the check when your lender also pays it out of escrow, and you have paid the same bill twice. Then somebody has to chase down a refund.

So before you pay anything, confirm whether your taxes are being escrowed. Getting the bill in the mail does not mean it is yours to pay directly.

2. If You Just Bought, Check How Taxes Were Handled at Closing

If you recently bought and a tax bill shows up, do not assume anything until you look at one document.

It comes down to timing, specifically whether you closed before or after the tax bills for the year were issued.

If you closed before the bills came out, then here in North Carolina your taxes were most likely prorated. Prorated means split based on the part of the year each person owned the home. At closing the seller gives you a credit for their share. Here is the part most people miss. You are then fully responsible for paying the entire bill when it arrives, because the seller already handed you their portion at the closing table.

If you closed after the bills were issued, in most cases the bill got paid in full right there at closing and you do not owe it again.

To tell which happened, pull your settlement statement, the document that lays out every dollar that changed hands at closing. It shows whether taxes were paid in full or prorated with a credit to you. If it was paid in full, you are done, do not pay it twice. If it was prorated, you got money from the seller and you still owe the full bill.

3. Read the Bill for Assessments and Value Changes

Actually read the bill instead of looking at the total at the bottom. Two things to look for.

The first is a special assessment, a one time charge for a specific project like a new road, sewer, or sidewalk work that benefits your property.

The second is a recent change in your assessed value, which is what your county says your property is worth. Your tax bill is calculated off that number, and a change cuts two ways.

If the assessed value went up and pushed your taxes up, your escrow account could now be short, meaning the lender was not collecting quite enough each month to cover the higher bill. When escrow comes up short, you make up the difference, often as a lump sum or a bump in the monthly payment. That change can hit your wallet months later.

A jump in assessed value can also be your opening. If you think the property is being valued too high, you can contest the assessment. There is a window of time to do it, and you need to check your county rules for the exact deadline, because once it closes it is closed. You may not win, but if you do it can bring the bill down.

4. Make Sure the Bill Is Only for Your Property

When the bill comes you naturally assume it is for your home and only your home. Most of the time that is true. It is worth confirming, because when it is wrong it is expensive in a way that hides in plain sight.

A real estate agent we know noticed a couple of years ago that his tax bill was lower than what his lender was collecting from him every month. That seemed backwards, so he looked into it. His lender had been collecting and paying taxes not just for his lot but for several other lots too, pulling that money out of his account.

A parcel is a single piece of property with its own ID number at the county. Make sure the only parcel on your bill is yours, then compare the bill against what your lender is actually collecting and paying. Those numbers should line up. If your lender is collecting more than your real bill, that money is going somewhere.

The scary version of this is not one wrong payment. It is money quietly leaving your account for years for property that was never yours.

Watch the full video for all four. Another kind of claim that can attach to your home is an unpaid contractor lien, which we covered in home upgrade red flags.

This is general education about how property tax bills work, not advice about your specific situation. Before you decide not to pay a bill, talk to an attorney in your state.

Common Questions

Do I get a property tax bill in North Carolina if my taxes are escrowed?

Yes. You are entitled to a copy of the bill whether or not your lender pays it, which is why receiving one does not tell you who is responsible for paying it.

Who pays property taxes the year I buy a house in NC?

It depends on whether you closed before or after the bills were issued. Closing before usually means taxes were prorated and you received a credit from the seller, and you then pay the full bill. Closing after usually means the bill was paid in full at closing.

What happens if property taxes go unpaid?

The county can place a tax lien on the property, and that lien can take priority over a mortgage. That priority is exactly why lenders prefer to escrow and pay taxes themselves.

Can I appeal my property tax assessment in North Carolina?

Yes, within the appeal window your county sets. The deadline matters, so check your county rules as soon as you see a value change you disagree with.

Why is my escrow payment going up?

Usually because taxes or insurance increased and the account came up short. The lender collects the shortage and adjusts the monthly amount going forward.

Questions About Your Closing or Your Tax Proration?

At Thomas & Webber, the tax proration is part of the settlement statement we prepare at closing, and we are happy to walk you through what your statement actually says.

Our offices in Mooresville, Cornelius, Denver, and Kannapolis serve buyers and sellers throughout the Lake Norman area, including Davidson, Huntersville, Sherrills Ford, Troutman, and Statesville.

Email your contract to close@thomasandwebber.com or call us at (704) 663-1600 to schedule your closing with us.