The State of Illinois, counties, and many municipalities charge a transfer tax based on the value of the property. Generally, transfer taxes are paid for by the seller; although in some cases the tax is split between the buyer and seller.
REO, or real estate owned, property generally means property owned by a bank after a foreclosure that is being sold to a third-party (you!). Some REO properties are owned by government sponsored enterprises (GSE’s) such as Fannie Mae or Freddie Mac. These entities are federally exempt from the responsibility to pay for certain closing costs – most notably, transfer taxes. If the seller doesn’t pay, who does? There was considerable debate about what happens when a buyer refuses to pay the transfer tax. However, the federal court for our area recently confirmed that the federal exemption for GSEs does not extend to buyer. This means that when Fannie Mae, Freddie Mac, or any other GSE is the seller, the buyer will be responsible for the transfer taxes.
It is essential that all parties to a real estate transaction understand the costs. For a surprise-free closing, contact The Kaman Law Firm, P.C.