A Q&A with Aaron Anderson, Director of Business Development, American Property Guard, a LERETA Company
Q. Aaron let’s start off with the basics. What is Senate Bill 2?
This past August, Governor Greg Abbott of Texas signed legislation delivering the largest property tax rebate in Texas history due to a surplus in funding at the state level. While this was certainly a welcomed tax relief for Texas homeowners, the timing of this new legislation has thrown something of a curveball to the title and tax industry. In Texas fashion, the new legislation had to go through different approvals. Elected officials approved it over the summer but any changes to taxes require constituent approval. So, on election day, November 7, Texans went to the polls and voted “yes” for Senate Bill 2 and the bill passed, as we all expected. But we had to be ready, just in case it didn’t pass, and this created something of a hurry-up-and-wait situation for real estate closings that occurred prior to the final vote last week.
Q. What does this mean for this year’s taxes? What are the new risk ratings?
Part of the nuance of this bill is that the tax cuts are for this year. Article 6 of the bill required tax assessors to prepare this year’s taxes as though voters had already approved the amendment. This means that the property tax bills that went out in October were “provisional” with the higher Homestead exemption amounts and lower tax amounts. Texas property taxes are ultimately due January 31, 2024, however, there are 124 collecting agencies out of the 1,305 total within Texas that issue discounts if you pay your taxes in October. So that added a whole other level of difficulty for assessors to issue those statements.
Q. What role does APG play in this situation and how did you handle the “potential” rebate before you knew it was certain?
APG provides title and settlement agents with certification saying what the taxes are and whether or not they are paid current. And then we include details on any existing exemptions, for example, Homestead, over 65, etc. FYI there are more than 75 tax exemptions available to borrowers throughout Texas.
APG guarantees that the tax certificates we provide our title company customers are accurate and sourced from live data directly from the tax agencies. If we miss any taxes that are delinquent, we cover the amount that was not collected and paid at closing. In addition, our parent company, LERETA provides post-closing tax tracking. LERETA tracks the loan on behalf of the servicer by providing property tax bills, making tax payments, etc.
So, when the news about the rebate broke, we began collecting all the feedback we were getting from the assessors so that we could let our clients know in real time what was happening in case they needed to set up an additional escrow at closing for the “what if”.
The tax certificates we provided to our clients before the official vote had a footnote describing exactly what the tax information is and that there was a potential of additional taxes due based on the November 7 vote.
For more information contact us at sales@LERETA.com.