## Facts

- Trinity Homes, LLC owned a tract in Boone County, Indiana, and planned to subdivide it into the Brittany Chase residential subdivision.
- In July 1999, Frank Y. Fang and Trinity executed a home purchase agreement for Lot 38 containing a tax-allocation clause.
- The clause required the seller to pay taxes “due and payable with respect to the real estate” at closing and to pay the “first real estate installment due after settlement,” with the purchaser paying taxes “thereafter.”
- Indiana real property is assessed as of March 1 each year, and taxes for that assessment year are billed in May and November of the following year.
- The parties closed on March 3, 2000; Trinity paid the May 2000 and November 2000 installments, which were based on the March 1, 1999 assessment of the pre-subdivision tract.
- After the 2000 assessment was completed for the newly created lots, Fang received a bill for Lot 38’s May 2001 installment ($2,074.95), paid it, and sought reimbursement from Trinity as the “first” installment due after closing.
- Trinity refused to reimburse, asserting it had already paid the first post-closing installment (May 2000) and that May 2001 was Fang’s responsibility.

## Issues

1. How should the contract’s tax provision allocating “taxes … due and payable with respect to the real estate” and the “first real estate installment due after settlement” be interpreted given Indiana’s assessment-and-billing cycle and the subdivision of the original tract?
2. Was the May 2001 installment for Lot 38 the “first real estate installment due after settlement” that the seller agreed to pay, or an installment the purchaser agreed to pay “thereafter”?

## Decision

- The Indiana Supreme Court granted transfer, vacating the Court of Appeals’ opinion.
- The Court reversed the small claims judgment for Fang and entered judgment for Trinity.
- The Court held that taxes assessed on a tract later subdivided are “due and payable with respect to” the resulting lots even if the lots were not individually assessed at the time of the assessment.
- The Court concluded the May 2000 installment was the “first real estate installment due after settlement,” and the May 2001 installment fell within the purchaser’s obligation to pay taxes “thereafter.”

## Legal Principles

- Contract terms are construed according to their ordinary meaning and read in context, including the governing statutory framework affecting performance.
- Under Indiana’s property tax regime, assessment occurs as of March 1, and the taxes for that assessment year become due in the following year’s May and November installments.
- Taxes assessed on a single tract that is later subdivided remain attributable to, and “with respect to,” the later-created lots for purposes of allocating responsibility under a purchase agreement.
- A promise to pay the “first” tax installment due after closing refers to the first installment that becomes due on the statutory schedule after the settlement date, not the first installment later billed under a newly created parcel number.

## Conclusion

The Indiana Supreme Court held that the builder-seller satisfied its contractual duty by paying the May 2000 installment as the first post-closing installment, and that the buyer was responsible for the later May 2001 installment billed after the lots were separately assessed.


Trinity Homes, LLC v. Fang, 848 N.E.2d 1065 (Ind. 2006)