Jan12026
Real Estate Q&A Series

If I pay only the current property taxes now, will that allow closing to move forward, and how are any remaining taxes handled at closing? – North Carolina

Short Answer

Sometimes, paying only the current year’s property taxes can remove the immediate roadblock that is holding up a transaction, but it does not automatically clear older delinquent taxes. In North Carolina, unpaid property taxes generally remain a lien on the property until fully paid, so a closing attorney will usually require delinquent taxes (plus any interest, penalties, and costs) to be paid from closing funds before the deed can be delivered and title can transfer. Any remaining taxes are typically handled on the closing statement as a payoff or as a proration between seller and buyer, depending on the type of tax and what the contract says.

Understanding the Problem

In North Carolina, a common question in a trust-owned home sale is whether paying only the current property taxes is enough to let a pending matter close and allow the real estate closing to move forward. The decision point is whether the transaction can proceed when older taxes are still delinquent, and what happens to those remaining taxes at the closing table. The key trigger is whether unpaid taxes still attach to the property as a lien that must be cleared before title can transfer through the closing attorney’s office.

Apply the Law

North Carolina treats unpaid real property taxes as a lien that generally stays with the property until paid. Because a buyer expects to receive title without tax liens, the closing attorney typically orders a tax search and requires payment of any delinquent taxes, including related charges, out of the seller’s proceeds at closing. Separately, for the current year’s taxes, North Carolina has a default rule that property taxes are prorated between seller and buyer on a calendar-year basis unless the contract changes that rule.

Key Requirements

  • Tax liens must be cleared: Delinquent real property taxes usually remain attached to the property until paid in full, including interest, penalties, and allowed costs.
  • Closing statement must account for taxes: The settlement statement typically shows payoffs for delinquent taxes and a separate proration (credit/debit) for the current year’s taxes unless the contract provides a different method.
  • Proper authority to sell and disburse: When the home is titled in a trust, the trustee (or other authorized signer) generally must have authority to sign the deed and direct how sale proceeds are disbursed, including reimbursements and payoffs shown on the closing statement.

What the Statutes Say

Analysis

Apply the Rule to the Facts: The property has delinquent taxes, and the goal is to clear a pending matter and then sell a trust-owned home. Paying only the current year’s taxes may satisfy a specific requirement in the pending matter, but older delinquent taxes can still remain as liens that a closing attorney will usually require to be paid before the sale can close. Because taxes are commonly handled through the closing statement, the remaining delinquent amounts are often paid out of sale proceeds as a payoff item, while the current year’s taxes are typically prorated between seller and buyer unless the contract changes that default rule.

Process & Timing

  1. Who files: No court filing is required just to pay taxes; payment is made by the taxpayer, trustee, or another interested party. Where: The county tax collector’s office for the county where the property is located. What: A request for a current tax status/payoff figure (often called a tax certification or tax payoff) and a receipt showing what years were paid. When: Before closing and early enough for the closing attorney to update the title/tax search.
  2. Closing preparation: The closing attorney orders a title search and tax status check and then lists delinquent taxes (and related charges) as payoffs on the settlement statement. The attorney also calculates the current-year proration under the contract and North Carolina’s default calendar-year approach if the contract is silent.
  3. Closing and disbursement: At closing, the settlement statement typically shows (a) payment to the tax office for delinquent amounts and (b) a proration credit/debit for the current year. If a person paid taxes out of pocket, reimbursement is usually handled as a line item on the settlement statement if the trustee approves and documentation supports it.

Exceptions & Pitfalls

  • Paying “current taxes” may not clear older liens: Even if the current year is paid, delinquent prior years can still cloud title and stop a sale closing until paid.
  • Interest, penalties, and costs: Delinquent tax balances often include more than the base tax. A payoff figure should be requested close to closing so the amount is accurate.
  • Contract can change proration: North Carolina has a default proration rule, but the purchase contract can allocate taxes differently. The settlement statement should match the contract’s tax paragraph.
  • Trust authority and reimbursement documentation: When a home is titled in a trust, the trustee typically controls disbursements. Reimbursement requests should be supported by receipts and a clear paper trail so the closing attorney can show it properly on the settlement statement.
  • Government acquisition timing issues: If the property is being acquired by a government agency, different timing and reimbursement concepts may apply to prorated taxes around vesting/possession, and the paperwork should be coordinated with the closing attorney.

Conclusion

In North Carolina, paying only the current year’s property taxes may remove an immediate condition for a pending matter, but delinquent taxes usually remain a lien until fully paid and can still prevent a real estate closing. At closing, the closing attorney typically pays delinquent taxes (including interest, penalties, and allowed costs) from the seller’s proceeds and prorates the current year’s taxes on a calendar-year basis unless the contract says otherwise. Next step: request a written tax payoff from the county tax collector and provide it to the closing attorney before the scheduled closing date.

Talk to a Real Estate Attorney

If a trust-owned home sale is being delayed by delinquent property taxes and a pending matter that must be cleared first, our firm has experienced attorneys who can help explain the closing requirements, coordinate with the closing attorney, and map out the timeline. Call us today at (919) 341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.

Category: Real Estate Q&A Series

Author: jpierce

Attorney Jared Pierce is the founder of Pierce Law Group in Raleigh, North Carolina, a firm he established with a dedicated focus on probate administration and estate planning across North Carolina. Born and raised in the Republic of South Africa, Jared moved to Durham with his family in 2001, bringing with him a rich cultural background and a distinctive accent that often serves as a conversation starter.