Asked and AnsweredI am buying an apartment from a sponsor and the contract provides for the buyer to pay the sponsor’s transfer taxes and legal fees? Is that normal?
It used to be. But there is a new normal. Sponsors love to pass along costs to their purchasers. As a matter of practice, the New York City and New York State transfer taxes are paid by the seller (except for the “mansion tax” on transactions of $1,000,000 or more, which is one percent transfer tax is paid by the buyer). In sponsor transactions, the transfer taxes were always passed along to the buyer, together with the legal fee of the sponsor’s attorney to close the transaction, which fee can be $1,500.00 or more these days. When you add these costs together, as a politician once said, you are starting to talk about “real money.” In today’s world, these costs should not be considered a “gimme” for the sponsor and should be considered an area of negotiation for the buyer. Sponsors are holding a significant amount of inventory and they need to move deals. There has never been a better time to negotiate hard when dealing with the developer of a new condominium project. For more on purchasing from a sponsor, see "Life's Not Fair-- More About Purchasing from a Sponsor".