"So, taxes—why do we care about taxes when we're transferring a property in Michigan?
It's simple: if the taxes are not current on the property, the county will not record the deed.
When we're doing our 40-year title search to ensure ownership and identify any liens, we also have to check the taxes. And it's not just about whether the current taxes have been paid. Any time a municipality issues a tax bill, it becomes a lien on the property the moment it's issued—even if there's a two- or three-month grace period for payment.
Someone might say, "Well, it was billed this summer, and I have until early fall to pay." That may be true, but if we're closing in the summer, we have to collect those taxes right then. Otherwise, the county simply won’t record the deed.
When we pay those taxes, the purchase agreement between the buyer and seller often includes a section about tax proration—and we get a lot of questions about that.
The most common type we see is calendar year proration. The formula is pretty simple. It’s a two-step process:
Step 1: Determine who occupied the property during the year.
For example, if the sale happens on July 1, each party owned the home for 50% of the year.
Step 2: Identify who paid the tax bill.
If the seller paid the summer tax bill and the buyer paid the winter tax bill, then the credits are divided accordingly—based on that 50/50 split and the days of occupancy.
And that's it. Simple, right?"
