Posted By: LostinRegLand
Cure Required? Transfer Taxes - 10/13/21 04:04 PM
Reviewing a loan post close and do not like how the transfer taxes were handled. They were added on to the Closing Disclosure two days after consummation with a new CD issued.
Back story--Loan was a refi and to remove three individuals from title. Two where the borrowers parents and they had gifted their portion (no consideration given and an exemption existed for waiving transfer taxes) and the third person was an ex-boyfriend. He had lived in the home and had paid on the mortgage. As far as I can tell from reading our state law on transfer taxes no exemption existed as the ex boyfriend had paid on the home and so his part of the debt was being "assumed" by the borrower thus consideration was given and transfer tax was required.
From looking through the file and the processing information no transfer tax was quoted at the beginning as the right questions were not asked by the title officer or the processor to ascertain that transfer tax would be due. Subsequently the tax was left off of the LE.
The tax was also left off of the Closing Disclosure. I could find an email between the Title Officer and the closer 3 days prior to the CD issuance that the Title Officer stated transfer tax would be due but that they did not know the amount yet. The least amount of fee that can be charged is the recording fee for the document.
A day after closing the Quit Claim deed was filed and the tax amount was finalized. At that point a new CD was issued with the inclusion of the amount. The staff is telling me that trigged a Change Circumstance as they had new information that the tax was now due. I disagree.
I believe we owe a cure as I do not feel that due diligence was performed to determine if transfer tax was due. I also do not like the fact that a substantial fee was added to the costs after closing. I feel like this was not in the borrowers best interest.
I am getting push back from the loan department as they do not feel like there was any way they could have known that transfer tax was due until after the Quit Claim deed was filed.
In my opinion is was a lack of due diligence and asking the right questions/having a basic understanding of what constitutes consideration when it comes to transfer taxes and the exemptions.
I would like opinions on this Cure or No Cure?
Back story--Loan was a refi and to remove three individuals from title. Two where the borrowers parents and they had gifted their portion (no consideration given and an exemption existed for waiving transfer taxes) and the third person was an ex-boyfriend. He had lived in the home and had paid on the mortgage. As far as I can tell from reading our state law on transfer taxes no exemption existed as the ex boyfriend had paid on the home and so his part of the debt was being "assumed" by the borrower thus consideration was given and transfer tax was required.
From looking through the file and the processing information no transfer tax was quoted at the beginning as the right questions were not asked by the title officer or the processor to ascertain that transfer tax would be due. Subsequently the tax was left off of the LE.
The tax was also left off of the Closing Disclosure. I could find an email between the Title Officer and the closer 3 days prior to the CD issuance that the Title Officer stated transfer tax would be due but that they did not know the amount yet. The least amount of fee that can be charged is the recording fee for the document.
A day after closing the Quit Claim deed was filed and the tax amount was finalized. At that point a new CD was issued with the inclusion of the amount. The staff is telling me that trigged a Change Circumstance as they had new information that the tax was now due. I disagree.
I believe we owe a cure as I do not feel that due diligence was performed to determine if transfer tax was due. I also do not like the fact that a substantial fee was added to the costs after closing. I feel like this was not in the borrowers best interest.
I am getting push back from the loan department as they do not feel like there was any way they could have known that transfer tax was due until after the Quit Claim deed was filed.
In my opinion is was a lack of due diligence and asking the right questions/having a basic understanding of what constitutes consideration when it comes to transfer taxes and the exemptions.
I would like opinions on this Cure or No Cure?