I'm refinancing my existing mortgage, just to lower my payment, no cash out, in California. I currently have an impound account to pay for taxes and insurance but don't plan on having one for the new loan. The taxes are not due until December 10th, but the lender wants me to either pay them to the county now, before closing, or pay the amount in to the lender at closing so (I assume) they can pay them. Is there some law or state rule in California that says the property taxes have to be paid before a refinance is done?
Looks like this situation is fairly common. I doubt it's a specific law in California, rather, lenders trying to be overly cautious on external risks. From a Q&A at Zillow:
One week before the closing we're being told the title company has a rule that property taxes (which are paid ahead here) due within 60 days of closing must be paid in full at closing (which is 30 days ahead of when the city says they are due).