What steps should I take to ensure the property taxes on my aunt’s former home were paid from the sale proceeds and resolve any outstanding tax bills? - Pennsylvania
The Short Answer
In Pennsylvania, unpaid property taxes tied to an estate-owned home are typically treated as estate obligations and are commonly handled at or around the closing (or paid from estate funds after the sale). If there are still outstanding tax bills, the estate’s personal representative may need to address them before making final distributions—because government claims can have priority over many other debts.
What Pennsylvania Law Says
When an estate does not have enough assets to pay everything, Pennsylvania law sets a priority system for which bills get paid first. Claims by the Commonwealth and its political subdivisions (which can include certain tax-related claims) are placed ahead of general unsecured claims, which is why property-tax issues should be taken seriously before the estate is wrapped up.
The Statute
The primary law governing this issue is 20 Pa.C.S. § 3392.
This statute establishes an order of payment for estate charges and claims when the estate cannot pay everything in full, including a priority category for claims by the Commonwealth and political subdivisions.
Relatedly, Pennsylvania law also recognizes that property held in a decedent’s estate may continue to be assessed for local taxation in the name of the decedent or the personal representative. See 53 Pa.C.S. § 8863.
Why You Should Speak with an Attorney
Even when everyone agrees the taxes “should have been paid at closing,” problems still happen—especially if a bill covered a different tax period, the property was reassessed, the sale wasn’t handled through a standard escrow, or notices went to the wrong address. Legal outcomes often depend on:
- Strict priorities for government claims: Pennsylvania’s estate payment rules can put certain governmental claims ahead of other creditors and beneficiaries. See 20 Pa.C.S. § 3392.
- Proof and paperwork: Whether taxes were actually paid often turns on the settlement sheet, tax certifications, and whether the correct taxing authorities were paid (county/municipal/school).
- Distribution risk: If the estate distributes money and a tax bill later surfaces, the personal representative can face disputes and potential liability unless the estate is properly administered and closed through the right process.
An attorney can quickly identify whether the issue is (1) a closing/escrow error, (2) a post-sale assessment or billing issue, or (3) an estate administration problem—and then communicate with the taxing authorities and other parties in a way that protects the estate and the personal representative.
If you want more background, you may also find these helpful: When Are Taxes Due After Selling Inherited Real Estate in Pennsylvania, and Who Pays Them? and How Do I Address Creditor Claims Before Selling an Estate House in Pennsylvania?.
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Disclaimer: This article provides general information under Pennsylvania law and does not create an attorney-client relationship. Laws change frequently. For legal advice specific to your situation, please consult with a licensed attorney.