We bought a house in Texas in August 2025 and we are currently dealing with a massive financial nightmare because our builder and lender misrepresented our 2025 property taxes. Weeks before closing, the lender (MTH Mortgage) explicitly told us in writing that our home was being assessed as "just land" for the 2025 tax year. They even promised our monthly payments were structured specifically to "make sure the payment doesn’t shoot up" the following year.
The problem is that under Texas law, tax status is based on whatever was physically on the lot on January 1st. Since the builder, Meritage had a nearly completed home sitting there on New Year's Day, the county billed us for a fully improved property not "just land". Meritage gave us a tiny tax credit of only ~$350 at closing based on a $22k land value, but the actual bill came in based on a ~$430k house value.
Because they used the wrong numbers, our mortgage payment just shot up by $500 bucks a month. Even worse, our lender had to pay the real tax bill out of our account, leaving us with a SIGNIFICANT negative escrow balance. We are out a total of $11k because the builder used "land-only" math to lower the credit they owed us, while the lender ignored the physical reality of the house to tell us it was "affordable."
Now, Meritage is offering a partial refund of $6,300 and trying to say they have nothing to do with the "estimate," EVEN THOUGH THE MORTGAGE COMPANY IS THERE INTERNAL/ AFFILIATED COMPANY while the mortgage manager is trying to dodge responsibility by saying he has "no insight" once the loan is sold. It feels like a total bait-and-switch.
WHAT DO WE DO HERE?
The mortgage company is refusing to explain their calculations and is telling us to take the 6.3k from lender. We think they need to give us the full amount of taxes owed, the 11k.
EDIT: THIS IS FOR THE 2025 PROPERTY TAXES. The value is assessed as of Jan 1,2025. WE BOUGHT THE HOME AUGUST 2025.
Builder misrepresented our property taxes at closing and now we’re $11k in the hole. Advice?
byu/ASleepyLawStudent inRealEstate
Posted by ASleepyLawStudent
15 Comments
They are not responsible for your taxes.
It stinks they got it wrong, but it is your job to know your tax situation
I’m shocked they even offered $6k
The escrow company dropped the ball on this. They should know new construction has special tax consideration. But, like the other commenter said, they are your responsibility.
$11,000 property tax on a property worth only $430,000! NO wonder people are fleeing Texas!
Unfortunately ypu should have the knowledge you have now before hand.
I would grab their offer quickly.
You should have done your own due diligence. Part of that would have been to contact the County Assessor to determine what you are looking at in terms of a tax bill. Most even have calculator worksheets on their sites to help you calculate this. Of course it is going to be re assessed with a new value once completed. Try and make payment arrangements.
This happened to one of my friends who bought a new build in Texas. The hell is going on down there?
People make mistake? And it is not necessarily because they are incompetent (although that could be), but things that worked before may not work anymore, or things fell between the cracks.
Regardless of anything, you will owe $11k (and more over time) of property tax on your $430k house every year (oof, I forgot how Texas property tax is so expensive).
It looks like the $6.3k covers the prorata of when they owned the house, so you are responsible of the taxes after you bought the house. It is only fair, and it is how it is done normally. They are losing some money too due to that assessment.
That’s a rough situation, definitely an unpleasant surprise. They should’ve calculated it correctly, it’s their business. With that said, I think it’s big that you got the 6.3k. If I were you I’d take it!
Also ask yourself an honest question, if you had known what the taxes would be would you have still gone for the house? I’m guessing the answer is yes. The other thing you could try is objecting with the county since the house wasn’t done on new years. I have no idea how that would go, but you could try.
shocked they are giving you anything. sucky situation but it’s ultimately on you. they did a poor job but getting them to pay all of it is nonsense.
texas tax protest deadline is may 15, file a protest with your county appraisal district asap and bring the closing docs showing what you were told. also check your title policy and the builder contract for any tax proration clause, you may have a claim against the builder or lender for the misrepresentation in writing. worth a free consult with a real estate attorney since you have it in writing.
Your property taxes in TX are 11k for a 430k house? Even if that were true, you bought the house in August so your property tax would only be max of $4600 for 2025.
>The problem is that under Texas law, tax status is based on whatever was physically on the lot on **January 1st**.
Not sure why you and/or your attorney were unaware of this law? It’s not like laws and property tax rates are secret.
It sounds like the 11k is a combination of the actual tax you owe from August to December 2025 plus the bumped up escrow for 2026? Paying property tax on the real property you own is just part of owning real property.
IMO the $6300 would be a gift and I’m guessing they’re offering it because they’re smarmy and it’s easier for them to pay you to go away. If they did everything legal on paper, the $6300 is truly a gift.
You didn’t have your own agent. You trusted everything the seller and their preferred/inhouse lender told you and you didn’t check the law and do your own due diligence.
100% on you.
Yeah they only owe you the $6k shorting relative to Jan 1st 2025 valuation. In reality they only owe you a pro-rated share of that. Everyone always knew your future taxes were going to be based on the full valuation, so that’s on you.
No one warned you?