A buyer and seller in Cranston, Rhode Island entered into a purchase and sale agreement. The agreement contains no specific provision about the real estate conveyance (deed excise) tax. At closing, a dispute arises about who should pay this tax. Under the customary practice and R.I. Gen. Laws § 44-25, which party is responsible for the deed excise tax?
Correct Answer
C) The seller, because the deed excise tax is customarily and typically paid by the seller
Under R.I. Gen. Laws § 44-25, Rhode Island imposes a real estate conveyance (deed excise) tax on the transfer of real property. By custom and standard practice in Rhode Island, the seller is responsible for paying this tax at closing. The tax is calculated based on the consideration paid for the property. Even when the purchase agreement is silent on the matter, the customary obligation falls on the seller as the party conveying the property.
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Related Topics & Key Terms
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Related Concepts
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
Specific performance is a court-ordered remedy that compels the breaching party to fulfill their obligations under the contract rather than simply paying monetary damages. It is an equitable remedy used when monetary damages would be inadequate.
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