A Michigan developer conveys a newly constructed condominium unit to a buyer for $375,000. The purchase agreement is silent on who pays the transfer tax. At closing, the title company prepares the settlement statement. Which of the following correctly reflects how Michigan's real estate transfer tax should appear on the settlement statement for this transaction?
Correct Answer
D) State transfer tax of $2,812.50 and county transfer tax of $412.50, both charged to the seller (developer) as the conveying party
Under Michigan law, both the state transfer tax ($7.50 per $1,000) and the county transfer tax ($1.10 per $1,000) are the seller's obligation. For a $375,000 sale: State tax = (375,000 ÷ 1,000) × $7.50 = $2,812.50. County tax = (375,000 ÷ 1,000) × $1.10 = $412.50. Since the purchase agreement is silent on transfer tax allocation, the legal default under MCL 207.502 places both charges on the seller (the developer/grantor). Both amounts appear as seller debits on the settlement statement.
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Related Topics & Key Terms
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Related Concepts
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
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