A Michigan purchase agreement includes a clause stating that real estate transfer taxes will be paid according to 'local custom.' The property sells for $200,000 in Wayne County. The buyer's agent tells the buyer that transfer taxes are negotiable and that the buyer should pay them. Under Michigan law, which of the following is the most accurate statement regarding who pays the Michigan real estate transfer tax?
Correct Answer
C) The seller is responsible for paying both the state transfer tax and the county transfer tax under Michigan law
Under the Michigan Real Estate Transfer Tax Act (MCL 207.501–207.513) and the County Real Estate Transfer Tax Act, the seller is responsible for paying both the state transfer tax ($7.50 per $1,000 of value) and the county transfer tax ($1.10 per $1,000 of value). While the parties may contractually agree to allocate these taxes differently, the statutory default is that the seller pays both taxes. The buyer's agent's statement that the buyer should pay them is contrary to Michigan statutory default.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
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