Documentary Transfer Tax – A state tax on the sale of real property, based on the sale price or equity transferred, being $.55 for each $500 of the taxable amount in most states. Some states use $1.10 per $1,000. This tax is imposed on each recorded document in which real property is sold. (Some cities charge a similar tax as well).
Earnest Money – an amount of money, given as part of the purchase price, deposited to a third party (escrow holder) by a person purchasing property and held in a trust account until the transaction is completed.
- Escrow Base Fee – the fee charged by the escrow company for processing the escrow. This fee is usually based on the sale price of the property and is charged to both Buyer and Seller.
- Escrow Demand Fee – the fee charged for ordering the payoff statement/demand from the lender of record on the subject property. This fee is typically charged to the Seller.
- Escrow Document Preparation Fee – this fee is charged to the Seller for preparing the Grant Deed.
- Escrow DOC Audit Fee – covers the cost of annual assessments, audits, bonding and licensing fees imposed on an independent escrow company, by the California Department of Corporation and Escrow Agents Fidelity Corporation. This fee is charged to both Buyer and the Seller.
- Escrow Loan-Tie-in Fee – the fee charged for signing and packaging the Buyers loan documents.
FHA (Federal Housing Administration) – an agency of the U.S. Department of Housing and Urban Development. Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.
Homeowners Association (HOA) – (1) An association of people who own homes in a given area, formed for the purpose of improving or maintaining the quality of the area. (2) An association formed by the builder of condominiums or planned developments, and required by statute in some states. The builder’s participation as well as the duties of the association is controlled by statute.
- HOA Homeowner Association Dues – dues charged by the HOA for the purpose of improving or maintaining the development. (usually a monthly charge).
- HOA Document Fee – fee charged to the Seller, by the HOA for supplying copies of HOA documents, such as Covenants, Conditions & Restriction, Financials, etc.
- HOA Transfer Fee – fee charged to the Seller, by the HOA when a property is sold and title is transferred to a new owner.
Home Warranty – private insurance usually paid for by the Seller, insuring a Buyer against defects (usually plumbing, heating, and electrical) in the home he has purchased. The period of insurance varies from company to company but is typically for a one-year period.
- Fire Insurance Impounds – money held by the lender for the payment of Fire Insurance – an insurance policy that covers against loss or damage by fire to a specific property (structure only)
- Flood Insurance Impounds – money held by the lender for the payment of Insurance that compensates for physical property damage resulting from flooding.
- Mortgage Insurance Premium Impounds – money held by the lender for the payment of Insurance that insures the lender against loss caused by the Borrower’s failure to make the loan payments
- Property Tax Impounds – money held by the lender for the payment of property taxes levied on real property based on the value of the property.
Loan Discount Points – a “point” is one percent of the loan amount. When referring to mortgages or deed of trust, the term is used to describe the percentage of discount rather than interest. “Points” are usually paid by the Seller in FHA and VA insured loans, and by either Buyer or Seller (or both) in conventional loans. “Points” are charged by the lender to adjust the interest rate to the required yield.
Non-Recurring Closing Costs – are charges or fees which only occur one time; i.e., escrow fee, title insurance policy, recording fees, document preparation, notary fees, loan origination, loan discount points, inspection fees, underwriting-basically anything that is a one-time fee and will not be paid again.
Preliminary Change of Ownership Report – to be completed by Buyer (transferee) prior to the transfer of subject property in accordance with Section 480.3 of the Revenue and Taxation Code in California. This report must be filed with each conveyance in the County Recorder’s office for the county where the property is located, and will be used by the County Assessor to update property tax rolls.
Property Hazard Disclosure Report – California has several laws (California Civil Code 1103) regarding natural hazard and environmental disclosures during real estate transactions. This report is paid for by the seller and provides the buyer with information about the property including Special Flood Hazard Areas, Earthquake Fault Zones, and other Statutory Natural Hazards.
- HOA Prorations – formula: monthly dues divided by 30 days equals per day amount (per diem) times the days that the party owns the property
- Property Tax Prorations – formula: 6 months taxes divided by 180 days equals per day amount (per diem) times the number of days the party owns the property
- Rent Prorations – formula: monthly rent divided by 30 days equals per day amount (per diem) times the days that the party owns the property
Reconveyance Fee – the fee charged by the trustee for issuing the deed of reconveyance. This deed is issued after the loan has been paid off upon request to do so by the beneficiary (lender) of that trust deed.
Recurring Closing Costs – are items, which will occur more than once; i.e., property taxes, interest, fire insurance, homeowners association dues, mortgage insurance, etc. These fees are paid each month or year during ownership of the property.
- Owners Title Insurance Policy – protects the Owner/Buyer against loss due to a defect in the title
- Lenders Title Policy – a policy which protects the Lender in the event of a loss due to a defect in title
- Title Endorsements – additional title insurance coverage required by the lender, paid by the Buyer.
Transaction Coordinator Fee – fee paid by the buyer, seller or both for a transaction coordinator to assist the real estate agent. The coordinator will make sure all broker-required documentation for the broker’s file is complete. The coordinator may also assist in ordering required inspections on the subject property; such as termite inspection, home inspection, hazard disclosure reports, appraisal, etc.
VA (Veteran’s Administration) Loan – housing loans to veterans by banks, savings and loans or other lenders, which are insured by the Veteran’s Administration, enabling veterans to buy a residence with little or no down payment.
Warehouse Fee – fee charged by the lender for the depositing of loans by the lender such as a mortgage company, and a bank, for sale at a later date. This is done when the mortgage company wishes to assemble a block of loans for sale, or when the company believes that the discount rate is dropping and the loan maybe sold for a higher price in the future.