A developer in Breckenridge, Colorado sells a condominium unit for $1,200,000. Breckenridge has a local real estate transfer tax of 1% on the sale price. The buyer's broker tells the buyer that under Colorado law, the buyer has a statutory right to negotiate the local transfer tax obligation to the seller. The broker also states that local transfer taxes in Colorado resort communities are capped at 1% by state statute. Which of the broker's statements is correct?
Correct Answer
D) The first statement is correct; the parties may negotiate who pays the local transfer tax, but there is no statutory cap
The first statement — that the parties may negotiate who pays the local transfer tax — is correct. Like most closing costs, the allocation of local transfer tax between buyer and seller is a matter of contract negotiation and is addressed in the CREC Contract to Buy and Sell Real Estate. However, the second statement is incorrect: Colorado does not impose a statutory cap of 1% on local real estate transfer taxes. Home-rule municipalities set their own rates, and while 1% is common in resort communities, there is no state law capping the rate at that level.
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Related Concepts
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
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