(NEW GFE and Transfer Tax [recording costs]) Under the New GFE rules, the lender is responsible for disclosing to the Purchaser the “Transfer Tax” (we call it the recording costs or taxes). These are usually based on the contract amount and are calculated at $3.33 per $1,000. If the lender makes a mistake in disclosing this amount on the GFE then the lender has to pay any overages in the recording cost at closing.
I am already aware of several cases when the lender has made a mistake and had to “eat the extra cost.” The usual mistake is due to the fact that the Clerk’s Office will base the recording cost on the purchase price or the local tax assessment, whichever is higher. The lender needs to check with the local assessor to verify what is the current tax assessment in order to correctly calculate the “Transfer Tax” for the GFE. Should the lender use the contract price, and the tax assessment is higher, the Clerk’s Office will base the recording costs for the Deed on the higher amount (which is more than the disclosed amount on the GFE).
There is however another group of errors regarding the Transfer Tax that the lender can avoid with the realtors help. In these situations the Contract does not properly identify the property being sold. The contract should include the legal description and correct address and names of the Seller. In addition, if there are more than one parcel being sold, be sure to describe each parcel individually in the contract. Even if there is a combined description, attempt to identify the individual descriptions or at least include in the description that there are X number of parcels being conveyed. By working together, we can eliminate some of the problems posed by the new GFE.
Please contact me if you have any questions.
William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/
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