A developer is selling a newly constructed townhome in a Colorado mountain resort community that has a local real estate transfer tax ordinance. The purchase contract negotiated between the developer and the buyer is silent on who pays the local transfer tax. Under standard Colorado practice and the CREC-approved Contract to Buy and Sell Real Estate, which party is most likely responsible for the local transfer tax, and why?
Correct Answer
D) The buyer, because local transfer taxes in Colorado resort communities are customarily and contractually the buyer's obligation unless the contract specifies otherwise.
In Colorado resort municipalities that impose local transfer taxes (such as Telluride, Snowmass Village, and similar communities), the transfer tax is customarily paid by the buyer. The CREC-approved Contract to Buy and Sell Real Estate includes provisions for local transfer taxes and, consistent with local custom in these jurisdictions, the buyer is typically responsible. When the contract is silent, local custom governs, and in Colorado mountain resort communities, the buyer bears this cost. Licensees must advise buyer clients of this obligation during the transaction.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Many states have laws to limit how much property taxes can increase each year, regardless of market value fluctuations.
Various programs and exemptions exist to reduce the property tax burden for specific groups, such as seniors, homesteaders, or veterans.
A transfer tax is a tax imposed on the transfer of ownership of real estate.
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Previous Question
A Colorado real estate licensee is advising clients about transfer-related costs in Colorado real property transactions. Which of the following statements about Colorado transfer taxes and fees is NOT accurate?
Next Question
A Colorado licensee is representing a buyer purchasing a $900,000 single-family home in a Colorado mountain municipality that imposes a 1% local transfer tax. The seller's listing agent insists that the seller is entitled to a credit for half the transfer tax because 'Colorado law requires equal splitting of all transfer taxes.' The buyer's licensee suspects this is incorrect. Which of the following best describes the correct legal and contractual position?