Home Buying in Marina Bay>Question Details

Megan, Home Buyer in California

We are purchasing a new townhouse in Contra Costa county (California). We questioned why the Good Faith

Asked by Megan, California Thu Nov 8, 2007

Estimate shows us paying all of the transfer tax when customarily in this county the buyer and seller each pay half of the transfer tax. They responded that when it is a newly constructed home the buyer is responsible to pay all of the transfer tax. Does this sound right?

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Hi Megan;
It is true that it is customary in this are4a for the Seller and the buyer to split the city tranfer tax and for the Seller to pay for the county transfer tax.But, it is not unusual when you are buying new construction for the builder or developer to ask the buyer to take the entire burden of all the transfer tax.
In either case, this should be carefully and specifically laid out in the purchase contract. Go get your copy, and look it over carefully. Your agent should have pointed out all the costs you were signing for when you made your offer.
In these days of new construction languishing on the market, all costs should be up for negotiation, and you should be made very aware of what you are signing.
Read your contract.
4 votes Thank Flag Link Thu Nov 8, 2007
The operative phrase here is "responsible to pay". That phrase is misleading. The Seller usually pays the CCCounty transfer tax and city tax is split 50/50. It is ALL negotiable. Unfortunately when dealing with the Builders agent in this case it sounds as if you have no choice and puts you on the defensive. All the more reason to have your own Realtor representing the Buyer, at no cost to you. Consider the poor Buyer here in Discovery Bay that just sold a home on the SF Peninsula where it us "usual and customary" for the Seller to pay Title Insurace costs only to find out that the usual and customary out here is, yes you guessed it, the Buyer. Bottom line; Use a local professional and read your contract!
2 votes Thank Flag Link Sat Nov 10, 2007
Of course I will echo what others have said and hope that you have a REALTOR. If for no other reason but to advise you of the "customs" and practicalities of buying in Contra Costa (but of course having a licensed agent on your side goes way beyond who pays for what). As someone mentioned it is "customarily" the seller in fact, that pays the county transfer tax in many areas of Contra Costa. But some areas have city transfer taxes too that may be split (customarily). Customary is just that. Its open to negotiation. I've worked for new home builders that do have the buyers pay for everything, but unless you've gone to a very high demand new home neighborhood, I'd say the buyers are much more in the drivers seat now. You can negotiate fees, payments, who pays for what, etc. They may be responding correctly in saying the buyer is responsible... because in fact, THEIR policy may be that the buyer pay for it all, there certainly is no law that I know of. And if that is their policy and they are unwilling to bend, you have a choice (before you sign) to accept or not.
Web Reference: http://www.diablovalley.net
1 vote Thank Flag Link Sun Nov 18, 2007
Hi Megan,
It is customary in CC County for the seller to pay the county transfer tax, and the buyer and seller to split the city of Richmond transfer tax 50/50. However, we sell re-sale homes, so if there is a different custom with brand new homes, please, agents, step forward!
1 vote Thank Flag Link Thu Nov 8, 2007
Also, Developers use CA DRE approved contracts not CAR purchase contracts. Even if you are represented by a Realtor "customary" means different things in different fields. Most Realtor's are not familiar with new construction nor the process of building a home, time lines, contract obligations, etc. Its a totally differently ballgame including lending. Most lenders will not or cannot loan on new construction which is why there is a approved lender who usually bypasses underwriting requirements because of the complexities of the building a home, timeline, delays, rate locks, etc.

This is an old question posted but again, totally different animal than resale.
0 votes Thank Flag Link Wed Sep 26, 2012
Yes. Unfortunately its true. I am speaking from experience as a Project Sales Manager for developers.
However, there is a way to work around this by asking for a closing cost credit to cover the transfer tax.
For a second opinion you can also ask title companies but its just the way it is.

Feel free to email me directly off a public forum if you have any other questions.


0 votes Thank Flag Link Wed Sep 26, 2012
I would think so. Why would a seller have to suddenly pay more tax than their regular roll?
0 votes Thank Flag Link Wed Sep 26, 2012
I know this is an old question but the key word in her question was "New Construction" and the buyers always pay for the transfer tax. In resale it would be different but in new construction the transfer tax falls on the buyers.. however they can always ask for a credit to help cover the cost.
0 votes Thank Flag Link Sun May 9, 2010
The answers that have been given are right on target. These points of negotiation, and there are many of them, are among the major reasons why working with a realtor is critical. However, it is up to you to find one who really gets out there and earns his commission. Getting seller credits to buy down your rate and closing costs is one of the most important functions any realtor can play in a given transaction. I would urge you to go with someone who fights for you and saves you lots of money on price, request for repairs, seller credits, inspections, transfer fees, escrow fees, and gettng the deal completed in a timely fashion.
Web Reference: http://www.apr.com/dougm
0 votes Thank Flag Link Sat Nov 17, 2007
You're using a Realtor in this transaction, correct? This is another example of why using a Realtor, even in new construction is critical. Your Realtor should be able to get the builder to pay this....which is customary in this county.good luck!
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Sat Nov 10, 2007
The Hagley G…, Real Estate Pro in Pleasanton, CA
It is customary in Contra Costa for the seller to pay the transfer tax and the city tax is split 50/50 between the buyer and seller. However, it can be negotiated during the contract negotiation.
0 votes Thank Flag Link Thu Nov 8, 2007
Pam Winterba…, Real Estate Pro in ,
Hello Megan. Please remember that a good faith estimate is exactly just that, an estimate. It's better to overestimate than underestimate. Just because the estimate shows you paying for the transfer tax does not mean that you can't negotiate something else. While there are certain local standards for who pays what, this standars are not cast in stone. I don't know what's customary when selling new homes. In my market the seller typically pays the transfer tax.
Web Reference: http://www.theMLShub.com
0 votes Thank Flag Link Thu Nov 8, 2007
Ute Ferdig -…, Real Estate Pro in ,
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