Essential Real Estate Law: Property Tax Proration & Real Estate Closings
In the City of Chicago, property taxes are paid in arrears. This means that property tax amounts are due the year after the tax year has passed. When a Buyer and Seller are working on their property sale, the property tax proration is a negotiated term. Because taxes are paid in arrears, the parties will not yet have received the property tax bill for the current year by the time of the closing. With each subsequent year, taxes go up. For this reason, the seller will usually pay 105+% of the previous year’s tax bill.
Essential Real Estate Law: Real Estate Closings & Title
When purchasing property, there are a few ways that a new owner can “take” title. There are three ways that the State of Illinois allows multiple property owners such as family members or business partners to hold title. 1) tenants in common, 2) joint tenants with right of survivorship, or 3) tenants by the entirety. Typically, new owners can choose which way to hold title and this can be changed in the future. It is important for Buyers to understand the different ways title can be held as it may affect the rights of creditors or the transfer of the property after an owner’s death.
In addition, there are different types of deeds that can be used to transfer title. There are four main types: General Warranty Deed, Special Warranty Deed, Bargain and Sale Deed, and a Quitclaim Deed. We will cover these types of deeds below after the types of title.
