Home Buying in 91423>Question Details

Marianne, Home Buyer in Los Angeles, CA

If Seller Pays Transfer Taxes & Owner's Title Policy, Are Those "Seller Credits to Buyer" at Closing?

Asked by Marianne, Los Angeles, CA Sat Jun 4, 2011

Hi. This is for the experienced and wise RE experts in Los Angeles:

I'm buying a condo in Sherman Oaks. Closing is June 15.

On my CAR Residential Purchase Agreement, Item 4 "Allocation of Costs," the Buyer and Seller each agreed to pay certain costs.

On mine, the Seller agreed to pay (a) all City and County Transfer Taxes (b) Owner Title Policy (c) HOA transfer and doc prep fees.

My questions is:

At Closing, for the HUD-1 Settlement Sheet and on my Good Faith Estimate (GFE) from Lender:

*** Are these considered "Seller CREDITS to Buyer"?? Or just Seller Expenses?

I'm a bit of a Control Freak, but I do not understand why these Costs should appear on MY HUD or GFE at all.

In LA, are Transfer Taxes & Owner's Title considered Buyer Costs -- and the payment of them by the Seller viewed a "Seller Credit to Buyer"?

Curiously, the HOA costs he's paying are NOT on my GFE or HUD.

Is there an ADVANTAGE to the Seller having them listed as CREDITS to Buyer?

Thanks!

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Answers

10
Sinead McAllister’s answer
BEST ANSWER
Hi Marianne,
I have over seven years experience as an escrow officer, so I feel qualified to answer your question. HUD imposed new regulations on the lenders as of January 2010, which makes the lenders disclose almost all fees as buyer costs. If your contract calls for the seller to pay certain costs (i.e. the owner's title policy and county/city transfer tax), the HUD statement/closing statement will offset those charges with a seller credit. If your contract calls for a separate seller credit for closing costs, these credits should not be included in that amount. There is no advantage to the seller in having it shown this was and no disadvantage to you as it is a wash.

Let me know if you need further explanation.

As far as email doc fees, this used to be charged by the lenders, but since they electronically send their docs to escrow and expect escrow to print them. (And we are talking two copies of 100+ page documents- not to mention countless redraws due to lender error) The escrow companies have instituted this fee to recoup some of their costs.

Thanks!
Sinead McAllister
2 votes Thank Flag Link Sat Jun 4, 2011
Obviously you've gotten the answer to your question by now, but no you're not a control freak for wanting to see what you're paying for during a transaction. I give my buyers and sellers an upfront cost estimate at the very beginning so there are no surprises and the end!
0 votes Thank Flag Link Thu Jan 9, 2014
Educating yourself about your costs and fees is very important. You are not a control freak! A good escrow company will be happy to go over your charges with you.
0 votes Thank Flag Link Fri Nov 8, 2013
The have to appear on the HUD per law. They should appear as sellers credits to buyer. Relax you are working with professionals that do their job right. What you say and the way you want to control it doesn't matter. These professionals are doing it the way the law and industry guidelines require. So step back and let them do their job. It will be less stressful for all
0 votes Thank Flag Link Thu Mar 7, 2013
HI, I am glad that you are moving to Sherman Oaks, it's a wonderful place to live. However, my question to you : why have you not received an explanation of costs from the escrow company or, from your agent?
These questions should be clearly and firmly answered.
While I do know the answers, I do not feel it is my place to step into this transaction, nor to offer you advice.
I wish you the best, please consult with the people you are working with. There should be no question left unanswered!

Charise Mitchell
818-269-1966
0 votes Thank Flag Link Sat Jun 4, 2011
Escrow should be a neutral party to the tranaction, however, its hard to see how they can be neutral if they are affiliated with the brokerage. This is why they have you sign an affiliate disclosure document. I prefer using escrow companies such as Chicago, Fidelity, First American, etc. They are truly neutral. Anyway, you should have your mortgage lender go over the HUD with you if your escrow officer has an attitude. Maybe after 35 years it's time for someone to retire. Sounds like they have forgotten who they are working for. Some days I wonder what ever happened to good 'ole customer service.
0 votes Thank Flag Link Sat Jun 4, 2011
If I am correct this showing on your HUD is a result of recent changes to the HUD to allow more transparency for the buyer. Seller has no benefit.
0 votes Thank Flag Link Sat Jun 4, 2011
For some reason HUD shows owners title policy as an expense for buyer but then shows a seller credit to buyer from seller. It is a seller expense but since its a policy for the buyer they give this transparency. I don't recall if they do the same with the taxes.
0 votes Thank Flag Link Sat Jun 4, 2011
My Escrow Agent has been doing this for 35 years, and gets incredibly insulated when asked a question. She sees it as challenging her authority. (You should have seen her when I asked about a $100 "E-mail Doc Fee" -- can you imagine? $100 to email docs? Next they'll be charging for paper and pens...)

Plus, the Escrow Company and Seller Agent RE Brokerage are owned by the same company.

That's one reason I'm suspicious why these are being listed as Seller Credits on MY HUD and GFE, rather than just be listed on the Seller's forms with no mention on mine....

I'm sure there must be some advantage to Seller to have them listed as being paid FOR Buyer...

If you've looked over HUD-1 and GFE forms, please let me know your experience re how these items are usually listed.

Thanks so much.
0 votes Thank Flag Link Sat Jun 4, 2011
HUD-1 can be somewhat confusing at times. Best thing to do is to call your escrow and go over it w/ them. Remember, you're paying for escrow. Genreally, they are happy to go over any Qs you may have.

Kobi
Web Reference: http://www.KobiCosta.com
0 votes Thank Flag Link Sat Jun 4, 2011
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