Which party in a transaction is responsible for the state transfer tax?

In real estate transactions, the responsibility for paying the state transfer tax typically falls on the seller. This is a common practice across many jurisdictions, including Michigan, where transfer taxes are assessed when property ownership changes hands. The reasoning behind this is that the transfer tax is seen as a fee associated with the relinquishment of ownership rather than the acquisition.

The seller is considered the party benefiting from the transaction since they are the ones receiving funds from the sale of the property. As a result, it aligns with the principle that the party profiting from the transaction should bear the associated costs, such as the state transfer tax.

While buyers may incur various costs associated with their purchase, the obligation to pay the state transfer tax is typically not one of them. It is more common for the buyer to be responsible for fees related to financing, inspections, and possibly title insurance as part of their closing costs. However, agreements can vary, and parties involved in the transaction may negotiate who bears the costs, potentially impacting local practices.

In the case of the underwriter and agent, their roles pertain to facilitating the transaction (i.e., ensuring proper title and financing) rather than bearing the cost of taxes associated with the sale. Therefore, recognizing the seller's responsibility for