At a Maryland settlement, the buyer qualifies as a first-time homebuyer purchasing a $400,000 principal residence. The contract is silent on who pays the Maryland state transfer tax. The seller's agent argues that because the contract does not specify, the tax should be split equally as is customary in non-first-time-homebuyer transactions. The buyer's agent disagrees. Which of the following correctly describes the legal outcome under Maryland law?
Correct Answer
B) The seller pays the full state transfer tax at the reduced rate of 0.25%, regardless of what the contract says.
Under Md. Code Ann., Tax-Prop. § 13-203(c), when the buyer qualifies as a first-time homebuyer purchasing a principal residence, Maryland statute mandates that the seller pays the full state transfer tax at the reduced rate of 0.25%. This is a statutory obligation, not a contractual default rule. The parties cannot override this outcome simply by leaving the contract silent—the statute controls. The seller owes 0.25% × $400,000 = $1,000 in state transfer tax, and the buyer owes nothing. The seller's agent's argument about customary splitting applies only to non-first-time-homebuyer transactions.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Reconciliation is the final step in the appraisal process where the appraiser analyzes the value indications from all applicable approaches and arrives at a single final opinion of value. It is not a simple average of the three values.
The comparable sales approach estimates a property's value by comparing it to similar properties that have recently sold in the same market area. It is the most widely used and reliable approach for appraising residential properties.
The cost approach estimates a property's value by calculating the current cost to rebuild the improvements, subtracting accumulated depreciation, and adding the land value. It is most reliable for new construction and special-purpose properties.
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