When a property is sold, a Seller will have to pay closing costs. Knowing the amount of these costs prior to your closing will avoid any surprises. If you have to use the proceeds to purchase another property, you should be aware of how much cash you will have available.
Transfer taxes – If you sell a property (one to three family home, condo or coop), you will pay transfer taxes. The rates for 2020 are:
Property Sale Price NY State Transfer tax NYC Transfer Tax Total Transfer Tax
$499,999 and less 0.40% 1.00% 1.40%
$500,000 - $1,999,999 0.40% 1.425% 1.825%
$2,000,000 - $2,999,999 0.40% 1.425% 1.825%
$3,000,000 - $4,999,999 0.65% 1.425% 2.075%
$5,000,000 - $9,999,999 0.65% 1.425% 2.075%
$10,000,000 - $14,999,999 0.65% 1.425% 2.075%
$15,000,000 - $19,999,999 0.65% 1.425% 2.075%
$20,000,000 - $24,999,999 0.65% 1.425% 2.075%
$25,000,000 or more 0.65% 1.425% 2.075%
Filp Tax – A flip tax is a tax that Coops collect traditionally from Sellers when the Seller’s stock is sold. It is not actually a tax because the building, not the government, collects it and it is used to keep monthly maintenance charges lower for the other tenant shareholders. The flip tax is usually a percentage of the sales price (1%-3%) or it could be a flat per share charge.
Mortage Payoff – If you have a mortgage on your property, the outstanding balance will have to be paid off at closing. The payoff amount is not the balance on your last statement. The bank will provide the amount due on the specific day you close plus the amount of interest your bank charges you on a daily basis. (A per diem interest amount). The closing agent generally takes the balance on the closing day plus two additional days of interest to cover the time it takes to send the check to the lender.
If you are paying off a coop loan, an attorney for the bank will come to the closing to collect the payoff and return your lease and stock so the closing agent can cancel them and issue a new lease and stock to the Purchaser.
Title Company Fees – The closing agent, who works for the title company, if the Purchaser is buying title insurance, will collect certain fees from you for performing various services such as taking the amount of your outstanding mortgage and sending it to the bank for you (known as a pick up fee). The closer may also have to hold some funds in escrow and will charge a fee for doing so. You can ask the title company to send you a copy of the title bill before closing so you are aware of the charges.
Real Estate Commissions – Your realtor is paid at the time of closing. The commission is usually 3%-6% of the purchase price. You should ask your realtor to send you a bill before the closing.
Move out fees – Coops usually charge the Seller a move out fee.
Property Disclosure Credit – Certain Sellers of one to four-family homes are required to give a Purchaser a property disclosure statement which gives information about the property. If any information is incorrect, the Seller could be liable for damages. However, if you give the Purchaser a $500.00 credit, you do not have to provide a disclosure statement and you are not liable for any post-closing issues with the property.
Adjustments – Adjustments for unpaid and prepaid bills may be taken at closing. For example, if there is an open real estate tax bill, you will have to pay the taxes for the period up until the day you turn over possession to the purchaser.
This is a list of probable closing costs that are generally paid at closing. However, each deal is unique so you may not be charged all of these and may have other costs not mentioned here. You should always consult with your attorney prior to the closing to see what your actual closing costs will be.
The preceding is for factual information only and is not intended to be legal advice. You should never attempt to address any of the issues raised here without the assistance of an attorney.