Tax Monitoring Fees

A closing cost used to ensure that borrowers pay their property taxes. A tax service fee is typically paid by the business borrower at the time the mortgage is made (the Closing), and it is standard practice for the lender to then pass this sum on to a tax service agency. The role of a tax service agency is to look for delinquent property taxes and alert the lender to prevent tax liens from existing against the borrower’s property. Since tax liens have priority over lender liens, banks want to ensure that they, not the taxing municipality, become the owner of these properties in the event of default.