Title Closing & Costs
What is the most important document at closing and why?
Deed - transfers property to purchaser
Scenario: Sally and Sam have sold their home to Tina and Max. The closing is set for August 23. The insurance policy of $1,700 was prepaid. Using the 12-month/30-day method, what will be Tina and Max's share of the insurance expense and how will it be handled on the settlement statement?
$1,700 ÷ 12 = $141.67 $141.67 ÷ 30 = $4.72 Seller - $141.67 x 7 = $991.69 $4.72 x 23 = $108.56 $991.69 + $108.56 = $1,100.25 Buyer - $1,700 - $1,100.25 = $599.75 will be credited to the seller and debited to the buyer.
Seller Paul will get the second quarter water bill at the end of June. The bill is $39.00 per quarter. If closing is on May 7, what will be Paul's share of the bill?
$23.22 $39 ÷ 91 days = $.43 per day $.43 x 54 days (Paul's share of the 91 days) = $23.22
What is the NY transfer tax rate?
$4.00 per $1,000 purchase price
Scenario: Sale price of the property is $323,900. Assumed mortgage is $75,000. What is the transfer tax?
$995.60 323,900 - 75,000 = 248,900 248,900/1,000 = 248.90 248.90 * 4 = 995.60
If a property sells for LESS than $500,000, what is the Real Property Transfer Tax (RPTT) rate?
1% of selling price
If a property sells for MORE than $500,000, what is the Real Property Transfer Tax (RPTT) rate?
1.425% of selling price
Money that the buyer or seller needs to PAY at closing. A. Debit B. Credit
A. Debit
A tax imposed on any deed or instrument which conveys interest in real property in New York State is: A. Real estate transfer tax B. Renewal tax C. Good samaritan tax
A. Real estate transfer tax
- Transfer taxes (state and local) - Broker commission - Attorney fees - Recording documents to clear the title - Satisfaction of existing liens - Special fees, such as co-op or condo fees. The _______________ usually pays these. A. Seller B. Buyer
A. Seller
Conveys the property and receives payment. A. Seller B. Buyer C. Closing agent
A. Seller
A written, chronological summary of the property's title records and other public records affecting rights and interests in the property is called a(n) ___________________________________.
Abstract of title
- Appraisal and credit report fees - Inspections - Mortgage recording fees - Title insurance - Attorney fees - Lender fees - Recording - Private Mortgage Insurance (PMI), if applicable - Special fees, such as co-op or condo fees The _______________ usually pays these. A. Seller B. Buyer
B. Buyer
Pays for the property and receives clear title. A. Seller B. Buyer C. Closing agent
B. Buyer
Money that the buyer or seller RECEIVES at closing. A. Debit B. Credit
B. Credit
If an item is paid for in advance by the seller, how will it be handled on the settlement statement?
Buyer = debit Seller = credit
Buyers Jim and Jan are closing on a home later this month. They have the right to review the completed settlement statement how long before closing? A. One calendar week prior to closing B. 2 days before closing C. 3 days before closing D. One business week before closing
C. 3 days before closing
Who should have title insurance? A. Buyer B. Seller C. Buyer and Lender D. Buyer and Seller
C. Buyer and Lender
Prepares all documents that need to be signed at the closing, including the actual settlement statements that show all the debits/credits assigned to the buyer and seller in the transaction. A. Seller B. Buyer C. Closing agent
C. Closing agent
Most lenders require buyers to purchase: A. Survey of the property B. Title insurance C. Homeowner's insurance D. Closing insurance
C. Homeowner's insurance
Which of the following locations is the least likely place to hold a closing? A. Title company B. Attorney's office C. Lender's site D. Broker's office
D. Broker's office
What do you call those items that the seller has incurred but have not been paid and how will they be handled on the settlement statement?
Items --> "arrears" Buyer = credit Seller = debit
Jim and Beth have sold their single-family residence to Tim and Sue and are closing on May 17. The real estate taxes for the property are $1,950. What is Jim and Beth's share of the taxes? What is Tim and Sue's share?
Jim & Beth = $742.14 Tim & Sue = $1,207.86 Total amount: $1,950.00 Monthly amount ($1,950 ÷ 12) $162.50 Daily amount ($162.50 ÷ 30) $5.42 Sellers' share = $742.14 $162.50 x 4 months (January through April) = $650 $5.42 x 17 days (May 1 through 17) = $92.14 $650 + $92.14 = $742.14 Buyers' share = $1,207.86 $1,950 - $742.14 = $1,207.86
Buyers Greg and Jane have arranged to take over Kathy and Al's insurance policy. The premium is $550 per year paid in advance on March 1. Closing on the property is set for June 11. What is Kathy and Al's share of the insurance cost?
Kathy & Al = $394.47 Total amount: $550.00 Daily amount ($550 ÷ 365) $1.51 Sellers' share = $155.53 $1.51 x 103 days (March 1 through June 11) = $155.53 Buyers' share = $394.47 $550 - $155.53 = $394.47 Since Kathy and Al paid the premium in advance, Greg and Jane's share of $394.47 will be credited to the sellers and debited to the buyers.
In addition to the state transfer tax, sellers who sell residential property in NYC will have to pay an additional tax. What is it called?
NYC Real Property Transfer Tax (RPTT)
What does "marketable title" mean?
One that is so free of defects -- buyer is certain he/she will not have to defend the title.
What role does the broker play before and during closing?
Ordering inspections, surveys or appraisals; help buyer find a mortgage lender or help schedule needed repairs to property; conduct a walk through or final inspection prior to closing.
Scenario: If a $575,000 property was located in New York City, what would the additional RPTT be? (What would the state transfer tax be?)
RPTT = $8,193.75 $575,000 x 1.425% = $8,193.75 (State transfer tax: $2,300)
- The buyer completes his or her financing arrangements (referred to as closing the loan). - The seller transfers the title. - Both buyer and seller pay the necessary taxes, fees and other charges. This all happens at the ____________________.
Title closing