[Annmichele]

We had a escrow customer bring in a tax bill this week that was due in October. In September we send all our escrow customers a letter reminding them to bring in there tax bills that they get in the mail. This customer did bring us two tax bills for her property and we paid them on time. The one she brought this week is for $20 on a few acres of her land. Does the bank need to pay the penalty or can we pay the penalty out of the customers escrow account?

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[Brent V]

I believe that the bank should pay the penalty. It’s a best practice to have the tax bills sent to the bank that will be making the payment on the tax bill from escrow. I understand this is easier said than done in some places, but if it is possible, it’s highly recommended this be implemented at the bank. We assume that you took all three tracts as collateral on the loan. In that case, the bank should be aware that payments were made on two tracts with a third outstanding. In the event that you only have two of the three tracts as collateral, you wouldn’t be required to pay this outstanding bill at all.

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