Obviously, closing costs are a major concern of purchasers of real estate. Sellers also need to be aware of what costs they will incur upon the sale of their premises. The typical seller’s closing costs are as follows for the sale of real property, including condominiums. The real estate broker’s fee and transfer tax also apply to the sale of a cooperative.
(1) The seller typically pays the real estate broker’s fee due, if any.
(2) The seller typically pays transfer taxes. New York State has a transfer tax of .004 percent. Any property in New York City carries an additional one percent (1%) transfer tax on properties $500,000 or less. Anything above that carries an additionalÂ transfer tax of 1-1/4%. A Transfer tax on a New York City property can be substantial.
Other muncipalities in New York, such as Yonkers, have their own transfer tax. This must be determined on a case by case basis.
Note that the “mansion tax” of one percent (1%) on properties with purchase prices over $1,000,000 is paid by the Purchaser. The transfer tax levied by properties located in Peconic, Long Island, is also paid by the Purchaser.
(3) If a seller in New York does not provide the statutory Property Condition Disclosure, then the purchaser shall receive a $500 credit at the closing. This cannot be couched as a reduction in the purchase price on the contract, and no credit given at closing. This does not apply to a cooperative, a commercial property, or a sale by an estate or other fiduciary.
(4) Property taxes not yet paid, but a lien, will be a credit to the purchaser prorated up until the date of the closing. For example, school tax on Long Island is not due until October, although it covers the period July 1st to December 31st. Hence, if you close in August, the purchaser will be paying the full tax due in October, and will get a credit from July 1st to the date of closing from the seller.
(5) If the contract provides that the seller is giving the purchaser a seller’s concession towards closing costs, this amount is deducted from the purchase price. The seller will receive a credit for the transfer tax attributable to the seller’s concession amount.
(6) The contract must be consulted to determine any other credits given to the purchaser by the seller for specific issues with the property.
(7) If there is a mortgage on the property, the title closer will usually charge a “pick up” fee per mortgage in the approximate amount of $175-$200. This is their compensation for confirming the pay-off amount, taking the pay-off check at the closing, and arranging for express delivery to the mortgage company.
(8) The seller will pay the recording fee for the Satisfaction of Mortgage. Lately, banks have been adding this cost to their pay-off, since they are required to forward a Satisfaction directly to the recording office of your county. Sometimes the title company will put this on their bill, but they are not allowed to charge you if the bank is charging you directly.
(9) If the sale is subject to a tenant, the seller will need to transfer the security deposit to the purchaser. Rent will be prorated to the date of closing.
(10) If the property has oil heat, the seller should obtain an oil dip from its oil company, with a receipt for the value of the oil, and the seller will get a credit for that amount from the purchaser.
(11) The seller may have to give the purchaser a credit for the prorated amount of the next water bill attributable to the seller. It is advisable to get a final reading near the closing, so the exact amount will be known.
(12) If the seller stays over beyond the closing date (in order to have time to move, or close on their purchase), which is usually limited to a five to seven day period, adjustments, including purchaser’s per diem interest on their mortgage, is calculated until the date of possession. If the seller stays beyond the agreed upon five to seven day period, there is an additional penalty of approximately $150-200 per day added to the adjustments.
(12) Seller’s attorney’s fee.
The above is a general guideline with respect to seller’s costs, deductions and credits. The seller’s attorney will determine which ones are applicable, and arrange for them at closing.
Cynthia M. Burke, http://www.nyrealtylaw.com