- Like most big events, preparation is the key to success.
- Prior to the closing, you should contact your utility providers to tell them that you will no longer own the home as of the day of the closing.
- You should contact your attorney and ask them to prepare the deed, property transfer tax return and any other documents that will be required for you to convey the title to the property to the buyer.
- You should make sure that everything other than items included in the sale are removed from the home prior to the buyer's walkthrough.
- Most closings in Vermont take place at an attorney's office. The office is usually that of the bank's attorney. In Vermont, attorneys are allowed to represent both the buyer and the bank in the same transaction so it is likely that the bank's attorney is also the buyer's attorney.
- Some bank's prefer to have the closing at the bank rather than an attorney's office so bank offices are the second most common place for a closing.
- There is no legal requirement for the parties to attend the closing. However, most closings will be attended by the buyer, seller, buyer's agent, seller's agent and the closing attorney. In some cases, the seller's attorney and a representative of the lender may be present but this is becoming more and more rare in Vermont.
- The closing is conducted by the closing attorney. Their office collects the money from the buyer and the bank so the funds become centralized in one location.
- Most closings start with the closing attorney having the buyer sign the documents from the buyer's bank. This is usually the longest segment of a closing. The seller's portion tends to be considerably shorter so you might want to consider showing up a few minutes after the buyer so you are not just sitting around waiting for them to complete their signing.
- Once the buyer finishes signing the bank';s documents, the closing attorney will then have you sign the deed and other seller documents. One of the documents the seller will sign is the Property Transfer Tax Return. In Vermont it is customary unless stated otherwise in the contract for the buyer to pay the property transfer tax. However, the seller is the party that provides the forms to the buyer.
- While the buyer incurs the majority of fees at the closing, there are a few fees the seller needs to pay:
(a) Real Estate Agent Fees - The real estate agent fees are deducted directly at closing.
(b) Mortgage Payoff - The closing attorney will payoff any mortgages you currently have on the property.
(c) Property Taxes - Depending upon the closing date, you may owe the buyer unpaid property taxes or the buyer may owe you for property taxes paid by you in advance. In Vermont most towns collect taxes 3-4 times per year. In Burlington for instance the first quarterly payment is due August 12th. This payment covers the taxes for July, August and September. If the closing takes place on August 31st, then the buyer would have to reimburse you for 30 days of taxes, but if the closing takes place on July 31st then you would owe the buyer 12 days of unpaid taxes.
(d) Recording Fees - Normally the only closing fee to seller is for the filing of the discharge or release of their mortgage in the land record. However, there may be other recording fees particularly if the property is held in a trust. Check with the closing attorney to determine how much these fees will be for your closing.
(e) Courier Fees - Normally the closing attorney will need to overnight your payoff check to your lender. They will charge you the cost of overnighting this check, which is usually about $25.
(f) Zoning Letters - Most towns now charge a seller $35 for a letter confirming there are no violations or open permits affecting the property. This amount is typically paid by the closing attorney in advance and then reimbursed by you at the closing.
(g) Land Gains Taxes - Most sellers will not have to deal with this but if you have owned the property for less than 6 years and the property has gone up in value, you may owe a land gains tax. You should check with your attorney to determine if you owe the tax as many exceptions exist.
(h) Withholdings - If you move out of the State of Vermont or are not a citizen of the United States, then you may subject to a withholding at the closing. If you are not a resident the closing attorney might be required to withhold 2.5% of the sales proceeds from you and if you are not a citizen of the United States the closing attorney may be required to withhold 10% of the sales proceeds. These funds are held until it can be determined if taxes are owed on the sale. You will eventually receive the money less any taxes due back but it may take some time. For the Vermont withholding, there is a process for obtaining a certificate prior to the closing from the tax department. Please contact your attorney to determine how to obtain a certificate.
- Despite the best preparation some items are not resolved by closing. If there are minor issues that need to be resolved after closing, oftentimes the closing attorney will agree to put a small portion of the seller's money aside until the seller resolves the issue satisfactorily. The closing attorney will hold the funds in "escrow" until the issues are resolved.