Questions homebuyers often ask our real estate attorneys
How much do I pay in property taxes for the year I buy a home?
How do I pay property taxes after I buy?
Can I check on property taxes myself?
Can I ask the seller for repairs after the inspection?
Will I have to pay the seller’s outstanding HOA assessments?
My partner and I are engaged and buying a home together. Can we choose tenancy by the entirety before we are married?
As a buyer, do I need to go to my real estate closing?
When and where will my closing take place?
What is earnest money?
What is a contingency?
Who will get my property if I die?
What is title insurance?
What is “Pull Title” and who does it?
Who pays for the owner’s policy fee? And what is it?
How much do I pay in property taxes for the year I buy a home?
The amount you pay is a matter of when the property taxes are due, owed, and billed—in relation to the closing date.
Tax bills that are due before the closing date are paid by the seller. Taxes that are owed but not yet due are allocated between the buyer and seller. To cover either amount, a tax credit will be given to the appropriate party at the closing.
Seems simple enough, but …
The date property taxes are billed is why tax proration comes into play. In Illinois, property taxes are paid one year “in arrears.” That means the current year’s property tax will not be billed until the following year, therefore property taxes are prorated. Tax proration is the process of estimating future property tax bills to ensure the seller and buyer only pay taxes for the time they each own the property.
A seasoned real estate attorney should be able to help calculate this proration amount. The formula our firm uses to determine tax credit is based on several factors, including whether the county has reassessed the property’s value or whether existing tax exemptions will be lost or preserved.
As a basic rule of thumb, City of Chicago tax prorations assume a 10% increase over the previous year's tax bill. Suburburban proations ususally assume a 5% increase.
How do I pay property taxes after I buy?
There are a few ways to pay property taxes.
You can escrow your taxes with your lender if you have a mortgage loan. You’ll pay a monthly fee toward your taxes, and the lender will use those fees to pay your taxes for you. Depending on the type of loan, the lenders may require an escrow and may charge fees or a higher interest rate if you choose not to do so.
You can pay the taxes directly to the county if you don’t have a mortgage loan OR do not want to escrow with your lender.
If you pay directly in Cook County, you can pay your taxes via check sent by mail or delivered to the County Treasurer’s office, online by credit card or ACH transfer, or at any local JPMorgan Chase branch.
Can I check on property taxes myself?
Yes. Property tax information is available from the county treasurer either online, by telephone or in person at their office. You might need the property’s PIN (permanent index number).
If the property is in Cook County, you can look up tax information on the County’s Property Tax Portal. Enter the street address or the PIN (permanent index number). The site shows the amounts billed, recent payment history, the property’s assessed valuation, property characteristics, history of tax exemptions, and assessment appeals. It also shows possible refunds and sales of delinquent taxes.
Collar counties all have their own web sites that make this information available too.
Can I ask the seller for repairs after the inspection?
It depends.
The answer is no, if you agreed to buy a property as-is, or if the contract does not have an inspection contingency (most new-constructions contracts do not have this contingency).
If you are not buying the property as-is and your contract includes an inspection contingency, the answer depends on the language in your contract. Standard contracts allow buyers to raise issues on major components of the property (like major appliances or HVAC mechanicals) that are either not working, not fully functional, or present safety hazards. This excludes such things as wear and tear, cosmetic matters, maintenance matters, upgrades, improvements, and old-but-functional appliances and mechanicals.
If the inspection reveals something that is technically excluded but is still important to you, you can ask for repair or a financial concession. However, asking in this situation could be a calculated risk. While you cannot gain concessions for such a matter unless you ask, asking could be considered an over-reach, which might cause the seller to cancel the contract.
Will I have to pay the seller’s outstanding HOA assessments?
Generally, no. Every seller is required to present a “paid assessment letter” from the condominium or homeowner’s association. The paid assessment letter confirms the amount of the monthly assessments. It also either confirms that the seller is current on all accounts or states how much is still due or owed. All balances must be paid at or before the closing.
However, if you are buying a foreclosed or bank-owned property, special rules may apply and require you to pay some delinquent assessments.
My partner and I are engaged and buying a home together. Can we choose tenancy by the entirety before we are married?
No. In Illinois, tenancy by the entirety is a special form of ownership that is available to married couples (or parties to a civil union) for their primary residence.
Two buyers that are engaged but not yet married do not meet these eligibility requirements and taking title this way would be ineffective.
Once married, a couple may transfer ownership from themselves to themselves to take advantage of the special benefits a tenancy by the entirety confers. Our firm can help you make this change.
As a buyer, do I need to go to my real estate closing?
The answer depends in part on whether you use a mortgage to purchase the property. Mortgage lenders want borrowers to sign live at the title company. So if you are using a loan, you can plan on attending the closing.
The answer is different if you are paying with cash. Cash transactions are usually closed using email and e-signing platforms without the need for the buyer to attend the closing.
In some instances buyers may be able to give power of attorney to someone else to sign for them. Under some very limited circumstances we may also be able to arrange for a buyer signing at some other location, however this is not a favored practice and requires considerable advance planning.
When and where will my closing take place?
The contract should have a closing date written in, or at least a description of how to determine that date (i.e., 30 days after the seller’s acceptance of the contract). The closing date can always be changed by agreement of both parties.
To the greatest extent possible, the closing date is to be respected by all parties involved in the transaction. From time to time, closings may be delayed due to lender delays, title issues, travel, illness, or other factors.
Closings generally take place at the title insurance company’s office that is closest to the property. Buyers are expected to sign closing documents live and in person on the date of closing. However, an emerging trend is to let buyers close from any title location convenient to them. This is subject to seller-side cooperation and agreement.
As for the time of day, closings are scheduled during standard business hours, Monday-Friday, between 9am-5pm. Closings are typically scheduled no later than 3:30 or 4:00. Again, all parties must agree to the start time.
Cash transactions have broader flexibility. Because there is no lender involved, most cash closings can be transacted entirely by email before or on the closing date.
What is earnest money?
Earnest money is the buyer’s good-faith deposit that will be held in escrow until the real estate transaction is over. Most often, the earnest money is held by participating real estate brokerages. If the brokers do not hold earnest money, the title insurance company or one of the attorneys will do so.
If the buyer and seller complete or “close” the transaction, the money will be delivered to the title company and applied towards the purchase price. If the contract is cancelled (for reasons that are not the buyer’s fault and provided that the cancellation notice is given in a proper manner) the money will be returned to the buyer. If the buyer defaults or breaches the contract, the seller may make a claim on the earnest money to compensate for damages caused.
Importantly, earnest money is not additional money paid over and above the purchase price. It is one component in how the purchase price is paid.
What is a contingency?
Most often, a buyer and seller are only willing or able to proceed with a transaction if certain conditions are met. These are the called contract contingencies. Standard contracts have multiple contingencies, which generally include:
- Attorney review
- Requirements for mortgage financing
- Review and approval of HOA documents
- Insurability
- Clear title
- Home inspection
Most contingencies are time sensitive and must adhere to a timeline established on the contract. If contingencies are not satisfied, the buyer may be able to cancel the contract and recoup all earnest money paid...and the seller will have to start over and find another buyer. It is generally in the seller’s best interest to close contingencies as soon as possible to limit buyers’ opportunities to kill the deal.
Who will get my property if I die?
This answer is complex, with one constant: Lenders, title companies and others will likely require documentation of a death (typically a death certificate) before they recognize a change in ownership.
Joint Tenancy
Tenancy in Common
Deed that provides one “Grantee”
If the property is in a Trust
If the buyer/s create a Transfer of Death Instrument (TODI)
If there’s a Last Will
If there’s no Last Will
What is title insurance?
Title insurance protects buyers and mortgage lenders from risks of forged deeds and claims others may have against the property being bought and sold. The commitment to insure is an initial report that specifies the property that can be insured and the current state of its title: who the current owner of record is, whether the property taxes are up to date, and what (if any) liens exist. While it can vary from place to place across the country, in Chicagoland, sellers customarily purchase title insurance for their buyers and buyers purchase loan policies for their mortgage lenders.
Because the seller pays for title insurance, the seller gets to choose the insurance provider. Sellers’ attorneys usually take care of this for their clients, but from time to time, real estate brokers, relocation companies, or other agencies may place the order.
What is “Pull Title” and who does it?
When mortgage company processors or anyone else asks about “pulling” title, they are asking who is ordering the title insurance search and commitment to insure. In most transactions, the Seller’s Attorney pulls title.
Who pays for the owner’s policy fee? And what is it?
The seller. This is a one-time insurance payment for owner’s title insurance that the seller must purchase for you, the buyer. It is typically paid at closing.
This insurance assures that (a) the seller legally owns the property and can convey title to the buyer, and (b) there are no unacceptable mortgages, liens, or other encumbrances that would limit the buyer’s ability to use and enjoy the property.
If you are using mortgage money toward the purchase price, you are also purchasing a lender’s title insurance policy. It is required in all the standard local real estate contracts and is a standard local practice.
Lender’s title insurance protects your lender against problems with the title, while the owner’s title insurance protects you, the buyer.