Double check those impounds!

A family I know put their new house on the market after living in it for only a year because their life insurance person had realized that they weren't getting enough impounded to cover their property taxes. That was when they found out that their impounds had been based on the value of the raw land without the house! However, when they called the lender to complain, they were told that the impounds are often off, and that it was their responsibility to pay the difference. Now, $100/month off would be acceptable, but $500/month? Someone made a big mistake.

Odds are, you're not going to win right away in a legal battle against a big company with lawyers on retainer. There's going to be some wording on one of those many pieces of paper that you signed that makes you responsible for insufficient impounds. Ask what your tax rate will be--if it's a new house, the builder should be able to tell you. Calculate what your annual tax should be, divide by 12, and see if your impounds add up to enough. If it doesn't, be aware that you're going to have to make up that difference. And if there's Mello-Roos, remember that non-payment of this tax can accelerate a foreclosure.

In the meantime, I suggested that the family not sell now. There are lots of houses on the market, and they'll get hit with taxes for moving so quickly. Better to get that backyard planted (it's still bare dirt) and take their time doing it right.