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?
Correct Answer
D) The listing agent is incorrect; there is no Colorado statute or CREC regulation requiring an equal split of local transfer taxes, and allocation is determined by contract terms and local custom, which typically places the obligation on the buyer.
No Colorado statute — including C.R.S. § 39-13-102 (which addresses the documentary fee, not local transfer taxes) — requires an equal split of local real estate transfer taxes. CREC regulations likewise do not mandate a 50/50 allocation. Transfer tax responsibility is a negotiable term governed by the contract and local custom. In most Colorado resort communities with local transfer taxes, custom places the obligation on the buyer, but the parties are free to negotiate otherwise. The listing agent's claim of a legal requirement for equal splitting is simply false, and the buyer's licensee is right to challenge it.
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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 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?
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