Understanding Property Tax Responsibilities in Escrow Accounts

If you pay property taxes into an escrow account as part of your mortgage payment, the responsibility for ensuring those taxes are paid lies with your mortgage lender. However, what happens if the lender fails to pay those taxes to the county? This article delves into the responsibilities and potential actions you can take when facing such a situation.

Escrow Account Purpose

When you pay property taxes into an escrow account, the lender is supposed to use these funds to pay your property taxes on your behalf. This ensures that your taxes are consistently and correctly paid without the need for you to manage the payments directly.

Lender's Responsibility

The lender has a fiduciary duty to manage the escrow funds properly and ensure timely payment of property taxes. If they fail to do so, it is their responsibility to rectify the situation. Failure to pay property taxes in a timely manner can lead to penalties, interest, and, in extreme cases, foreclosure on your property.

Your Liability

Despite the escrow arrangement, if the lender does not pay the taxes the county may still hold you responsible for the unpaid taxes. You could face penalties, interest, and even foreclosure if the taxes remain unpaid. Therefore, it is crucial to take prompt action to protect your property.

Recommended Actions

Contact Your Lender: Reach out to your mortgage lender immediately to inquire about the status of your property tax payments. Ensure they are aware of the late notices you are receiving. Review Your Escrow Statement: Check your escrow account statements to confirm that your payments are being applied correctly. Document Everything: Keep records of all communications and notices related to the property taxes and your escrow account. Consider Legal Advice: If the issue is not resolved promptly, you may want to seek legal advice to understand your rights and options.

Property Owner’s Responsibility

The property owner remains the sole party responsible for the payment of property taxes. The agreement that exists between you and the holder or servicer of the mortgage does not alter this responsibility. However, if the taxes are not paid in a timely manner and it costs you fees, interest, or even affects your property rights, you do have an enforceable action against the mortgage holder.

Protecting Your Property

While the lender is responsible for paying the taxes from the escrow account, it is vital to act quickly to address the situation. Ensuring that your lender is aware of the late notices and maintaining detailed records of all communications are crucial steps in protecting your property.