Who Pays Costs at Closing?

Who Pays Costs at Closing?

There are many costs to be paid at a real estate closing. I am often asked, “what is the “custom” as to payment of closing costs in Florida?” Frankly, this is a loaded question. There is not a single answer. In commercial transactions, everything is negotiable and who pays each individual closing cost is often negotiated. When it comes down to it, there are generally only 2 things that anyone cares about anyway: documentary stamps on the deed and title insurance premium. Title insurance premiums are promulgated in Florida, so there is no shopping for a deal. However, since title insurance benefits the Buyer, the Buyer usually wants to select the agent (usually Buyer’s attorney, if licensed in Florida). Therefore, Buyer concedes and pays the title premium. However, sometimes search costs are passed back to the Seller.

Doc Stamps (and in Miami-Dade County, Surtax) remain an issue. Most attorneys start with the position that the “custom” is that Sellers pay. This is so only because that is the custom in residential transactions (see below). However, Sellers and their attorneys will always attempt to shift this cost and as many other nominal charges to the Buyer. Deal economics and other factors setting negotiating strength will determine the outcome.

Florida residential transactions are more set. It is customary for the Buyer to pay for survey, title premium and recording costs. The Seller, on the other hand, pays for the title commitment or other search costs and doc stamps. However, in Palm Beach County, Seller is responsible for the title premium (rather than Buyer) and selects the title/closing agent.

Of course, in both residential and commercial transaction, the Buyer is responsible for all financing costs, including additional title premium, doc stamps and intangible tax on the note and mortgage, bank fees and recording costs on the mortgage and loan documents.

The bottom line is that the custom of payment of closing costs depends on the type of transaction and the location of the transaction. If it is a commercial transaction – it is no holds barred. Negotiate!