Contract Question: Paying backtaxes for seller

[Michael Lerch]

I have a motivated seller that owes around $10,000 in property taxes. I offered to pay the taxes + $13,000 for the home. I called the title agency and they said they can take care of this at closing.

Do I make the purchase price $23,000 all together? Where do I write on the purchase agreement that $10,000 of that is to go towards the taxes owed? I'm guessing it's the "other agreements" section, but I just want to be sure I'm not supposed to use "subject-to: paying $10,000 in backtaxes" although I'm sure that Subject-to is not meant for that purpose.

Help :)

[Account Closed]

I've done this a lot. I write the purchase price/total consideration as $13K. Then in terms and conditions I indicate that buyer is to pay all past due property taxes and that current year property taxes are not to be pro-rated. That takes care of taxes.

Is your seller prepared for any other expenses that might come out of his proceeds? Will he owe any title or escrow fees? Any transfer tax or recording fees? Sellers are often looking to get a net amount and many don't know much about closing fees. You can be the judge of this situation with this seller, but in my experience nothing sours a deal like a seller getting less than they expected at closing. It's not my job to control all the variables, but it is my job to manage expectations as much as possible. I try to be as clear and comprehensive about what to expect upfront. In some deals, I've written the contract to net the seller their number and I pay everything else. Really depends on the seller's needs and how many issues there are that will affect closing costs.