PURCHASE OF REAL ESTATE IN VERMONT

By William Tracy Carris, Esq.

I hope you choose our firm to represent you in the purchase of real estate. Following is a brief overview of the process of purchasing real property in Vermont.

The first document we would want to review would be your REAL ESTATE PURCHASE AND SALE CONTRACT from the Realtor.   We will want to review some of the legal issues and expenses associated with purchasing property in Vermont.   The following procedures, costs and expenses are normally associated with a Vermont property conveyance.

1.  TITLE to the property will be taken in the name of the person listed on the Purchase and Sale Contract, unless directed otherwise.  We typically like to include your middle initial when drafting deeds to avoid possible confusion.

2.  VERMONT PROPERTY TRANSFER TAX RETURN ON REAL ESTATE – There is a tax on the transfer of real property in Vermont and it is based on the value, or the price paid for said property and whether or not the property is a primary or secondary home.  If the property is a primary home the first $100,000 is taxed at .5% and anything above at 1.25%.  If a secondary home the entire property will be taxed at 1.25%. 

For example, a primary residence with a purchase price in the amount of $215,000.00 the transfer tax is calculated as follows: the first $100,000 x .005 = $500, the remainder $115,000 x .0125 = 1,437.50.  $1,437.50 + $500 is $1,937.50 total real estate transfer tax.   If the property were a secondary house, the real estate transfer tax would be $215,000 x .0125 = $2,687.50 because the property will be a second home/investment property.

3. VERMONT REAL ESTATE TAX ADJUSTMENT - Real estate taxes are adjusted at the time of closing.  Most tax years in the towns run from July 1 through June 30.  Tax bills are sent out at different times depending on the town.  The purchaser is responsible for taxes from the date of closing to the end of the tax year.   You might consider paying any balance of your share at the time of closing in order to avoid any penalties.  You will not receive a new tax bill for the current year.  NOTE - for purchases occurring early in the calendar year, the area of taxes causes the greatest confusion after a closing since a purchaser may not receive a new tax bill for the current year.

4.  VERMONT TOWN CLERK'S FEES - The town clerk in the town where the deed is to be recorded charges $10.00 per page to record each legal document, together with a $10.00 fee for filing the property transfer tax return.  There is a mortgage deed and the fees typically run between $50.00 and $120.00.

5.  HAZARD INSURANCE - You, as a purchaser, are responsible for obtaining insurance covering your property.   Please provide us with the name of your insurance agent as soon as possible.

6.  MISCELLANEOUS REAL ESTATE CHARGES - Water, sewer and taxes will be prorated and adjusted at closing.  All adjustments will be obtained as early as possible so that you will know in advance of the closing the total costs of the adjustments.

7.  ATTORNEY FEES – Our attorneys' time is billed at $150.00 per hour and our paralegal staff time is billed at $60.00 per hour.  A typical closing will include conferring with the brokers, consulting with you as a client and with the other attorneys, preparing the documents for the bank, completing the title search and representing you throughout the matter.  Our services DO NOT include any representations or warranties as to boundaries, location of any building or systems thereon, the functioning of the well, septic, heating, plumbing or similar systems. 

In Vermont each town maintains its own land records.  Our office completes the title search in that town and of course, must travel to the town and search the land and tax records.  Each town has a different system of indexing.  Our search must go back more than 40 years to create an abstract in order for us to provide a title report.   

After completing the title work and reviewing the abstract, if you will be borrowing funds from a lending institution for the purchase of the property, a loan policy of title insurance is prepared and forwarded to the Lender for their review.  In addition to the services mentioned above, the documents are reviewed and closing adjustments are made and we provide representation at the closing including recording of the documents and preparation of final title policy after the deed has been recorded. 

Disbursements are billed for charges made by the town clerks for use of the land records, photocopies, telephone calls, postage and any other expenses incurred on your behalf in representing you in this transaction.

It is hard to determine an exact price for your closing but I encourage you to call us at 802-287-9110 and we will narrow down the total cost and attempt to give you a reasonable estimate.

8.  VERMONT REAL ESTATE TITLE INSURANCE - As a purchaser of the above property, you may choose to purchase title insurance.   We strongly recommend that you obtain an owner’s title insurance policy.  The title insurance policy insures that you have marketable title to the property subject to any exceptions contained therein as of the date of purchase.  The cost to you is a onetime premium paid at closing. The policy is effective as of the day you purchase and continue even after you sell, if a problem is later discovered.  A First American Title Insurance Company policy will be issued.  The title insurance premium rates are determined by the company and are on file with the State of Vermont. Based on a purchase price of $215,000.00 the title insurance premium would be $786.25; as the price goes down so does the insurance premium.  You should know that if you are getting financing through a bank, the lending institution will require title insurance for the amount of the money you are borrowing.    You should note however, that the title insurance company does insist on a policy value of the higher of assessed value of the property or the purchase price. 

9.  CERTIFIED FUNDS - the balance of the purchase price and any additional costs after deducting your deposit and the amount of money you are receiving from the lending institution, should be in the form of a certified check or bank check made payable to yourself, to be endorsed at the time of closing or in your case a transfer from your Heritage account.   Our office will provide notice to you if that is the case.  We will try to let you know as soon as possible the total monies to be due and they can be included in your certified funds if time allows.

Please bring a picture ID to the closing and be advised that our office will provide you with a complete set of copies after the closing on your property.  Upon completion of the file, we reserve the right to destroy the file after seven (7) years.

If you have any questions, please feel free to give William Tracy Carris, Esq. a call at 802-287-9110.  If I am not available, please ask to speak with Kim at extension 110 or Cristen at extension 115.  We look forward to working with you.