When you opened the mail today and found a property tax bill staring back at you, your first thought was probably, "Wait, doesn't my mortgage payment cover this?" You're not alone. Thousands of California homeowners experience this same confusion every year when they receive property tax bills despite having an escrow account set up through their mortgage lender.
At Ratebeat, we understand the stress that unexpected bills can create. As California's trusted mortgage lender, we're here to walk you through exactly why this happens and what steps you need to take to resolve it.
Understanding Your Escrow Account
Before we dive into why you received that tax bill, let's clarify what an escrow account actually does. When you secured your mortgage through Ratebeat or another lender, your monthly payment likely includes more than just principal and interest. A portion goes into an escrow account—sometimes called an impound account in California—which your mortgage servicer uses to pay your property taxes and homeowners insurance when they come due.
Think of it as an automated savings plan. Instead of scrambling to come up with several thousand dollars once or twice a year for property taxes, you pay a manageable amount each month. Your lender estimates your annual property tax and insurance costs, divides that by 12, and adds it to your monthly mortgage payment.
For example, if your annual California property taxes are $6,000 and your homeowners insurance is $1,800, that's $7,800 total. Your lender would collect approximately $650 per month ($7,800 ÷ 12) and deposit it into your escrow account. When your tax bill arrives, your servicer pays it directly from these funds.
Why You Received a Property Tax Bill With an Escrow Account
Receiving a property tax bill when you have an escrow account doesn't automatically mean something went wrong. Here are the most common reasons California homeowners see these bills:
1. It's an Informational Copy
Many California counties send property tax bills to the homeowner for record-keeping purposes, even when they know a mortgage servicer will make the payment. This is simply for your records and doesn't require any action on your part. Your lender will still pay the bill from your escrow account as scheduled.
2. Your Loan Servicer Changed Recently
One of the most frequent causes of confusion occurs when your mortgage is transferred to a new servicer. If this transfer happened mid-cycle, the county tax collector may have sent the bill to your previous servicer, who no longer handles your account. The new servicer might not have received the bill or updated their records in time, resulting in you receiving a notice.
3. Clerical or Address Errors
Sometimes taxing authorities send bills directly to homeowners by mistake, even when the mortgage servicer is responsible for payment. With millions of property tax bills mailed annually in California, these administrative errors do happen.
4. Timing Issues
Property tax bills are often mailed out weeks or months before the payment is actually due. Your escrow account may be scheduled to pay closer to the deadline to maximize the funds available for interest earnings. The bill you received may simply be early notification.
5. Supplemental Tax Bills
California has a unique supplemental tax system. When you purchase property or complete new construction, the county assessor sends a supplemental tax bill for the difference between the old and new assessed values. Most mortgage lenders do NOT pay supplemental tax bills from escrow accounts—these typically remain the homeowner's responsibility.
6. Escrow Account Shortage
If your property taxes increased due to a reassessment or change in tax rates, your escrow account might not have sufficient funds to cover the full amount. This can happen when property values rise or after Proposition 19 reassessments.
7. You're a New Homeowner
If you recently purchased your California home through Ratebeat, you may receive tax bills during the transition period. The escrow from your home purchase and your ongoing mortgage escrow are two different accounts, and it takes time for the county to update their records with your lender's information.
What to Do When You Receive a Property Tax Bill
Don't panic, but don't ignore it either. Here's your step-by-step action plan:
Step 1: Verify It's Not a Supplemental Bill
First, check whether this is a regular annual property tax bill or a supplemental assessment. Supplemental bills are almost always your responsibility, not your lender's. These bills arrive separately from the annual tax bill and typically must be paid directly by the homeowner.
Step 2: Contact Your Local Tax Office
Call your county tax collector's office to confirm whether the bill is informational or if payment is actually outstanding. Let them know your property taxes are paid through an escrow account and ask if they've received payment from your mortgage servicer.
In California, you can usually find this information online through your county treasurer-tax collector's website. Have your Assessor's Parcel Number (APN) ready when you call or search online.
Step 3: Review Your Mortgage Statement
Pull out your recent mortgage statements and look for the escrow section. This will show:
- Your current escrow balance
- Recent disbursements made by your lender
- Any payments made to the tax authority
- Whether there's been a recent escrow analysis
Your statement should clearly indicate if property taxes were paid and when.
Step 4: Contact Ratebeat or Your Mortgage Servicer
If the tax office confirms the taxes haven't been paid, immediately contact your mortgage servicer. At Ratebeat, we make this easy through our customer service channels. Have the following information ready:
- Your loan number
- A copy of the tax bill
- The APN
- Information from your conversation with the tax office
Ask your servicer:
- Has the payment been scheduled?
- When will it be paid?
- Is there a shortage in the escrow account?
- Do you need to take any action?
Federal regulations require mortgage lenders to manage escrow accounts properly and make timely payments. If there's been an error, your servicer is required to correct it and may need to pay any late penalties incurred.
Step 5: Request an Escrow Analysis
Ask your lender for a current escrow account analysis. This document shows:
- How much you're paying into escrow monthly
- Projected annual expenses for taxes and insurance
- Current account balance
- Whether there's a shortage or surplus
If your property taxes have increased and your monthly escrow payment hasn't been adjusted, you'll see a shortage. Your lender should provide options to address this, either through a one-time payment or by increasing your monthly payment over the next year.
Step 6: Send a Notice of Error (If Necessary)
If phone calls don't resolve the issue, federal law gives you the right to send a formal "notice of error" to your servicer. They must:
- Acknowledge receipt within 5 business days
- Investigate and respond within 30 days (extended to 45 days in some cases)
- Correct the error or explain why the information is accurate
Keep copies of all correspondence and document every conversation with dates, times, and names of representatives you speak with.
Step 7: Follow Up Until Resolved
Don't assume it's handled after one call or email. Continue monitoring your statements and confirm with the tax authority that payment was received before the deadline. Missing property tax deadlines in California can result in:
- 10% penalty on unpaid amounts
- Monthly interest charges
- Potential tax liens on your property
- In extreme cases, tax foreclosure
How Ratebeat Handles Escrow Accounts
At Ratebeat, we take escrow management seriously. When you finance your California home with us, we:
- Accurately estimate your annual property taxes using current county assessor data and your specific property information.
- Set up proper cushions in your escrow account to handle fluctuations in taxes and insurance premiums, as required by California law.
- Monitor tax payment deadlines for all California counties we serve and ensure timely payments to avoid penalties.
- Conduct annual escrow analyses to ensure your account is properly funded and adjust your monthly payment if necessary.
- Pay interest on escrow balances as required by California Civil Code § 2954, which was recently expanded under Assembly Bill 493.
- Provide transparent statements so you always know exactly where your money is going.
Our experienced staff understands California's unique property tax system, including supplemental bills, Proposition 13 protections, and how reassessments work. When you work with Ratebeat for your mortgage needs, you're partnering with a lender who knows the California market inside and out.
Understanding California's Property Tax System
California's property tax system has some unique characteristics that homeowners should understand:
Proposition 13 Protections
Under Proposition 13, your property taxes can't increase by more than 2% per year unless there's a change of ownership or new construction. However, taxes can still rise due to voter-approved bonds and special assessments.
Supplemental Tax Bills
When property changes hands or new construction is completed, California counties issue supplemental tax bills. These represent the difference between the old assessed value and new assessed value, prorated for the remainder of the fiscal year. Expect to receive these 4-6 months after purchasing your home.
Fiscal Year Timing
California's property tax year runs from July 1 to June 30. Annual tax bills are typically mailed in October, with payments due in two installments:
- First installment: Due November 1, delinquent after December 10
- Second installment: Due February 1, delinquent after April 10
Understanding these deadlines helps you know when to expect escrow disbursements from your lender.
Preventing Future Confusion
Once you've resolved the current situation, take these steps to prevent future confusion:
Keep Your Contact Information Updated
Make sure both your mortgage servicer and county tax collector have your current mailing address, email, and phone number. If you move or your contact information changes, update both immediately.
Sign Up for Online Access
Most county tax collectors in California offer online portals where you can view your property tax information, payment history, and account status. Register for these services so you can quickly check payment status without waiting on hold.
Review Annual Escrow Statements Carefully
Your lender sends you an annual escrow analysis statement. Read it thoroughly and contact your servicer if something doesn't look right. This is your opportunity to catch errors before they become problems.
Monitor Property Value Changes
If you appeal your property assessment or your home's value changes significantly, your property taxes will change too. Let your servicer know if you're appealing an assessment so they can adjust their estimates.
Understand What's NOT Covered by Escrow
Remember that escrow typically only covers:
- Annual property taxes
- Homeowners insurance
- Private mortgage insurance (PMI) if applicable
Escrow does NOT typically cover:
- Supplemental property tax bills
- Special assessments
- HOA fees
- Utility bills
- Water and sewer charges
You remain responsible for paying these items directly.
When Your Mortgage Is Paid Off
It's important to plan ahead. When you pay off your mortgage, your escrow account will be closed, and you'll receive any remaining balance as a refund. From that point forward, you're responsible for paying property taxes and insurance directly.
Ratebeat recommends setting up a self-managed savings account to continue setting aside money monthly for these expenses. Divide your annual property tax bill by 12 and automatically transfer that amount to savings each month—essentially creating your own personal escrow account.
You'll also need to contact your county tax collector to ensure they have your direct mailing address for future tax bills.
Common Mistakes to Avoid
Don't Ignore Any Tax Bill
Even if you're certain it's a mistake, never ignore a property tax bill. A quick phone call can clear up confusion and prevent potential late fees or liens.
Don't Pay the Bill and Your Mortgage Payment
If you pay the tax bill directly AND your lender also pays it from escrow, you've essentially paid twice. While you'll eventually get a refund, it ties up your money unnecessarily. Always verify who's responsible for payment before sending money.
Don't Assume Your Lender Will Catch Everything
While lenders have systems in place to track and pay taxes, errors can occur. You're ultimately responsible for ensuring your property taxes are paid on time. Stay engaged and monitor your accounts.
Don't Wait Until After the Deadline
If there's any question about whether your taxes will be paid on time, take action immediately. Don't wait until after the payment deadline has passed and penalties have accrued.
How Ratebeat Makes Homeownership Easier
At Ratebeat, we believe that securing a mortgage should be the beginning of a long-term relationship, not just a one-time transaction. That's why we offer:
Competitive California Mortgage Rates: We understand the California market and offer rates that help you achieve your homeownership goals affordably.
Expert Guidance: Our experienced loan officers know California property tax laws, escrow requirements, and how to help you navigate complex situations.
Transparent Communication: We explain every aspect of your mortgage, including how your escrow account works and what to expect throughout the life of your loan.
Responsive Customer Service: When questions arise—like receiving an unexpected property tax bill—our team is here to help you find answers quickly.
Pre-Qualification Services: Whether you're a first-time homebuyer or looking to refinance, we can help you understand your options and get pre-qualified for a home loan that fits your budget.
Multiple Loan Products: From conventional mortgages to FHA and VA loans, we originate a range of mortgage products to meet diverse needs across California, New Jersey, Texas, and Connecticut.
Take Action Today
If you've received a property tax bill and have an escrow account, don't let confusion turn into a crisis. Follow the steps outlined above, and remember that Ratebeat's experienced staff is always here to help you navigate these situations.
For current Ratebeat customers with questions about their escrow account or property taxes, contact our customer service team. We're here to ensure your homeownership experience is smooth and stress-free.
For prospective homebuyers interested in learning more about how we handle escrow accounts and property taxes, or to get pre-qualified for a competitive mortgage rate in California, reach out to Ratebeat today. Let us show you why California homeowners trust us with their mortgage needs.
Remember, receiving a property tax bill when you have an escrow account is often routine and easily resolved. Stay proactive, communicate with your lender and tax office, and keep good records. With the right approach and Ratebeat on your side, you can handle property tax matters with confidence.
Frequently Asked Questions
Q: Why did I receive a property tax bill if I have an escrow account with my mortgage?
A: There are several common reasons. Your county may send you an informational copy for your records even though your lender will pay from escrow. It could be due to a recent change in your loan servicer, clerical errors, or timing—bills are often mailed before the actual payment date. Additionally, supplemental tax bills in California are typically not paid by your lender and remain your responsibility. Contact your tax office and mortgage servicer to verify the payment status.
Q: Do I need to pay the property tax bill if my mortgage company has an escrow account?
A: Generally, no—your mortgage servicer should pay regular annual property taxes from your escrow account. However, California supplemental tax bills are usually NOT covered by escrow and must be paid directly by you. Before ignoring any bill, verify with your county tax collector whether payment has been received and with your lender whether they've scheduled the payment. If it's a supplemental bill, you are responsible for payment.
Q: How do I know if my lender paid my property taxes from my escrow account?
A: Check your monthly mortgage statement in the escrow section, which should list all disbursements including property tax payments. You can also call your county tax collector with your Assessor's Parcel Number (APN) to verify payment status. Most California counties also offer online portals where you can view payment history. Finally, your annual escrow analysis statement will detail all payments made throughout the year.
Q: What happens if my mortgage company doesn't pay my property taxes on time?
A: In California, late property tax payments incur a 10% penalty plus monthly interest charges. If taxes remain unpaid, the county can place a lien on your property and eventually pursue tax foreclosure. If your lender fails to pay taxes from your escrow account, contact them immediately and send a formal "notice of error" if necessary. Federal law requires servicers to correct escrow errors, and they may be responsible for any penalties resulting from their failure to pay on time.
Q: Can I remove my escrow account and pay property taxes directly?
A: In California, whether you can cancel your escrow (impound) account depends on several factors. California Civil Code § 2954 allows lenders to require impound accounts for single-family, owner-occupied dwellings under certain conditions, typically when you have less than 20% equity in your home or when required by FHA or VA loan regulations. If you have significant equity and a conventional loan, you may be able to request an escrow waiver, though lenders often charge a fee or require a slightly higher interest rate. Contact Ratebeat to discuss your specific situation and options.
Q: What is a supplemental property tax bill and why doesn't my escrow cover it?
A: California issues supplemental tax bills when property changes ownership or new construction is completed. This bill represents the difference between the old and new assessed values, prorated for the remainder of the tax year. Most mortgage lenders exclude supplemental bills from escrow coverage because they're one-time charges that occur outside the regular tax cycle. As the homeowner, you're responsible for paying these directly to the county. Expect to receive supplemental bills 4-6 months after purchasing your California home.
Q: How much should be in my escrow account for property taxes?
A: Your lender calculates your annual property tax bill, divides it by 12, and collects that amount monthly. California law also allows lenders to maintain a cushion (typically equivalent to two months of escrow payments) to handle unexpected increases in taxes or insurance. Your annual escrow analysis statement will show the required balance. If your property taxes increase due to reassessment or voter-approved bonds, your monthly escrow payment will be adjusted accordingly.
