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.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Valuation Question
Background Knowledge for Valuation
Real World Application in Valuation
Common Mistakes to Avoid on Valuation Questions
Related Topics & Key Terms
Key Terms:
More Valuation Questions
The appraisal principle of substitution states that:
Physical deterioration, functional obsolescence, and external obsolescence are the three types of:
Highest and best use means the use that is:
In the sales comparison approach, adjustments are always made to the:
The sales comparison approach to appraisal is most commonly used for which type of property?
- → Which formula best represents the cost approach to appraisal?
- → Which appraisal method is most commonly used for residential properties and relies on recent sales of comparable properties?
- → The sales comparison approach to appraisal is most commonly used for which type of property?
- → The sales comparison approach to appraisal is most appropriate for which type of property?
- → A West Virginia property with 4 bedrooms but only 1 bathroom suffers from:
- → A Comparative Market Analysis (CMA) is best described as:
- → James owns a farm in rural Tennessee that qualifies for the Greenbelt Law. Under Tennessee's Greenbelt Law, how is agricultural land assessed for property tax purposes?
- → Which of the following correctly identifies the three types of depreciation recognized in real estate appraisal?
- → Which four criteria must a use satisfy to qualify as the highest and best use of a property?
- → Highest and best use:
People Also Study
Buyer Representation Agreement
8% of exam
Property Ownership
10% of exam
Land Use Controls and Regulations
8% of exam
Financing
12% of exam
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?