Under Illinois law, which statement most accurately describes how responsibility for paying real estate transfer taxes is determined at closing?
Correct Answer
A) Statutory incidence, local custom, and contractual allocation are three distinct considerations, and the parties' written agreement can shift payment responsibility from the customary payer to the other party.
Under 35 ILCS 200/31-25, the Illinois state real estate transfer tax is imposed on the transferor (seller) as a matter of statutory incidence. However, Illinois contract law permits the parties to allocate the economic burden of transfer taxes differently in their purchase agreement. This means the statutory obligation, local closing custom, and the parties' contractual allocation are three separate considerations that do not always point to the same party. A licensee must understand all three layers rather than assuming one universal rule governs every closing.
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