Adjusting the Homestead Refund Check After Closing:  How to Do It

HNW Real Estate, Landlord/Tenant, and Zoning

A client called our office after the sale of his home.  Middletown Township apparently deducted the homestead rebate paid by the seller from the new owner’s tax bill.  As a result, the new owner is getting the benefit of the prior owner’s homestead rebate.   The previous owner was not happy.  We advised that she called the township who said essentially “oh, just call the new owner and tell them to send you a check for your rebate.”   It seems to me this is not a proper way for the township to save a few pennies on sending property owners a separate check for their homestead rebate.  NJ property taxes are confusing enough without telling recent sellers to go back and hash it out with the new owner who is getting the benefit of the seller’s homestead rebate.

The following clause can be placed into all contracts for residential sellers.  It’s fairly common practice to do so.  Buyer and Seller understand and acknowledged that Seller’s New Jersey Homestead Rebate may appear as a credit on the property’s tax records after closing of title.  In the event a credit is applied, Buyer shall reimburse Seller for same within thirty (30) days of receiving notice as to the amount of said credit.  This provision shall survive closing of title.

Some parties may resist it and form realtor contracts have language specifically negating any homestead rebate adjustment but nonetheless it should be inserted.

To discuss your NJ real estate matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County NJ Real Estate Closing Attorney

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