Property Taxes

Two Options for Paying Property Taxes In Colorado

If you are responsible for paying your own property taxes and they are not being escrowed with your mortgage payment, you have two options available in Colorado.  The first option is to pay the entire amount of the prior year’s taxes in full on or before April 30th.  The second option is to pay your property taxes in two installments – the first installment is due on or before February 28th and the second installment is due on or before June 15th.

Property Taxes and Your Closing. Depending on the time of year that a property closes and which method the Lender uses to pay property taxes, the Title Company will follow one of several procedures for collecting taxes at closing.

  • If  you’re closing during the first couple weeks of the year, before the counties have certified the new mill levies, the Title Company will normally escrow from the Seller 125% of the prior year’s property tax amount.  Once the mill levies are certified and the actual tax amount is available, the prior year’s taxes will be paid from the escrow and the difference will be refunded to the Seller.

Lender’s Procedure for Handling Property Taxes.  If you are selling your home and closing early in the year, your Lender will direct the Title Company handling the closing on how to collect the property taxes. Lenders typically request the Title Company to handle the payment of the prior year’s taxes in one of two ways:

  • The first option is to collect from the Seller (by means of a debit entry on their Settlement Statement/HUD-1) the entire amount of taxes due and remit that amount to the appropriate County Treasure prior to April 30th.
  • The second option is for the Title Company to collect and pay only the first half of the prior year’s taxes. In this case, the Seller will be debited and the Buyer credited for the entire amount of the prior year’s taxes.  The Buyer will then be debited for the first half of the prior year’s tax amount and the Title Company will pay the amount to the County.  The Lender will collect a tax escrow and will pay the second installment when it comes due on or before June 15th. 

By the first part of February, parties to a real estate transaction often encounter the problem of what to do when the mortgage payoff statement indicates the prior year’s taxes have been disbursed from the escrow account by the existing Lender, but have not yet been received by the Treasure. The Title Company will have a procedures in place for this scenerio.

The bottom line, the Title Company is responsible for conveying clear title to the new owners.