Unit 5: NC Property Taxes and Settlement Flashcards
Debit
Amount charged to a party to pay a bill
Who pays pest inspection for buyer with VA loan?
Seller
Trust account
Place where broker holds money belonging to other parties
Excise tax
Amount of $1 per $500 of purchase price charged when a deed is recorded
Credit
Amount received by a party it pay a bill
Closing
Final settlement crested by the terms of the Offer to Purchase and Contract
Recording
Creates constructive notice of the contents of the document
Proration
Dividing expenses between the buyer and seller based on ownership periods
Lender/escrow accounts
Place where lender holds borrower’s funds to pay bills at a later time
Buyer always pays to start account
Settlement statement
Summary of financial part of a closing for omen party to the transaction
Double entry debits and credits
Always equal in amounts
Loan discount points
Charged by lender in exchange for lower interest rates . Increase lenders yield on loan
First deed of trust
Creates a financing lien and has highest priority
Loan origination fee
Administrative fee charged by lender to set up loan
Conventional loan
Neither insured or guarantee by government
Second deed of trust
Loan created with a lower lien priority such as seller financing
Recording of deed of trust
Buyer pays
Tenant security deposits
Debit seller, credit buyer
Unpaid taxes from previous year
Seller pays
Loan assumption entry
Debit seller, credit buyer
Annual interest
NOT part of every proration
Recording of warranty deed
Buyer pays
Buyer’s earnest money
Credit to buyer
Due diligence fee
Debit seller, credit buyer
Tenant security deposit
Debit seller full amount, credit buyer full amount
Excise tax
Total sales price / $500
NOT printed on the sakes contract, it’s printed on the deed.
Paid by seller (debit seller)
Always a whole dollar amount
Pest inspection on VA loan
Debit seller
NC law: assessed value must equal
Market value
NC real property taxes
Attach to property as of January 1
No penalties if paid by January 5th
NC machinery act
Governs all taxation including ad velorum taxes
States that at time of assessment, assessed value must equal market value
Real property assessments
Every 8 years (Octennial reappraisal)
Horizontal adjustment: every 4 years after octennial adjustment, city or county may uniformly adjust property up or down across the board
Tax rates
Can be adjusted annually to meet budget needs
In NC, tax rate/ 100
Good funds settlement act
Requires the deed and deed of trust be recorded before funds are dispersed
NC Rules
1) seller owns day of closing settlement
2) use 360 days in a year , 30 days in every month
3) never prorate : tax reserve balance, security deposits, mortgage payment due for month of settlement
4) items typically prorated; current years taxes, interest on assumed loan,
Proration formula
Total bill/ days in billing period x days owed
No single entry CREDITS for seller
Only debits
Double entry items for closing worksheet
1) Selling price: debit buyer, credit seller
2) Due diligence fee : credit buyer, Debit seller
3) paid real estate taxes : debit buyer, credit seller
