Arrears: A What?

Couple calculating budget, finance and tax while planning investment, loan and bills at home from kitchen

Explore the intricacies of property tax payments in Hamilton County, Ohio, where taxes are settled in arrears, impacting both sellers and buyers during real estate transactions.

As Realtors, we often see words and phrases contained within a “Contract to Purchase” that are not commonly used in our daily conversational language but have important ramifications for the buyer and/or seller — easements, short proration method, title insurance, arrears, etc. 

For purposes of this article, we will focus on the word arrears. Merriam-Webster’s Dictionary defines arrears as “an unpaid and overdue debt.”

The State of Ohio handles property tax payments in a unique (and universally confusing way). Real estate property taxes in Hamilton County, Ohio are paid in arrears and due in two half-year installments. Arrears means the most recent tax bill you received in June covered property taxes owed from July 1, 2022, through December 31, 2022. So we’re really paying our property taxes after the fact- or in arrears. Most homeowners rarely see a tax bill because the lender is holding the real estate property tax payment in an escrow fund as part of the monthly mortgage payments. Most of the confusion about real estate property taxes being paid in arrears happens when one closes on the sale of a home. 

Paying Ohio property taxes at closing is one of the most confusing costs for sellers. When a closing occurs, the company handling the closing will call the County Auditor to find out the date of the most recent property tax payment. For purposes of this article, we will assume the seller paid the tax bill issued in June 2023 and is closing on the sale of the home on October 31, 2023. This means the seller hasn’t paid property taxes owed for the period from January 1, 2023-October 1, 2023. Since real property taxes are paid in arrears, the closing document and settlement statement will show that the seller owes property taxes for the property from January 1, 2023 to October 31, 2023. 

The amount owed for the property taxes will be deducted from the seller’s sale proceeds and will appear as a credit to the buyer on the settlement statement. The reason it appears as a credit to the buyer is because the buyer will receive a property tax bill for the property during a period of time when s/he didn’t own the property (January 2023-October 2023) and is responsible for paying that bill. Remember that the seller gave the buyer the money to pay this property tax bill, and it showed up as a credit to the buyer on the settlement statement.

If you are a seller who escrowed your real estate property tax payments with your lender, you must pay the real estate property tax payment at closing. After closing, your lender will send you a check which represents the funds it held in escrow for your real estate property tax payments. Please note that it may take a couple of months for you to receive that check from your lender.

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Carol Harris


With a 35+ year career in real estate, Carol has an unmatched experience in the Cincinnati residential market. Carol started her career partnering with Cincinnati’s first full-time female realtor, Sheila Miller. With Shelia’s mentorship, she developed a wealth of knowledge and built a reputation for selling high-end real estate. Carol and Shelia became one of Cincinnati’s leading teams, selling many of the city’s most expensive and iconic properties. Carol continues to grow the team through the examples of mentorship and teamwork. She is proud of what The CK Group is growing into and thankful for the chance to share, mentor, and work alongside such an outstanding group of women.