Residential vs. Commercial
Just bought a brownstone in Bed Stuy, closed and all about three weeks ago. Now lawyer telling me that title closer made a mistake when completing the ACRIS documents, and because of that mistake I ended up paying $4,078.75 less than I was supposed to for the mortgage recording tax. Supposedly, this is because the…
Just bought a brownstone in Bed Stuy, closed and all about three weeks ago. Now lawyer telling me that title closer made a mistake when completing the ACRIS documents, and because of that mistake I ended up paying $4,078.75 less than I was supposed to for the mortgage recording tax. Supposedly, this is because the title closer computed the mortgage recording tax for a residential purchase, when in actuality this is considered a commercial purchase (which charges a higher tax). The property is a 4 family dwelling, and according to them, it is classified as residential for various municipal depts and commercial for others. Does this sound familiar to anyone out there? It is NOT a mixed use building and the C of O clearly states that it is a 4 fam residential. How can it be both and which “municipal depts” do I need to look into to find out my property’s classifications? I feel like I’m being shaken down for $4000, which, after purchasing a house, I definitely do not have.
What is shown on your HUD1 for the charge for the mortgage tax? If this is the figure you are speaking about about (mortgage tax) and the title company made a mistake and undercharged, that is their problem. Check out RESPA rules. Certain closing charges have a ‘no tolerance’ rule – if that is what is stated on the HUD1, that is what the charge must be. If they had overcharged, they would have to return money to you. Undercharged – they should have known better. This covers bank financing (not a private mortgage or a all cash purchase).
Congrats on your new place!
Sometimes the way the property is listed in Acris is incorrect. If the property was a mixed use property and then was seized through foreclosure or right before a foreclosure, it may be listed as a residential property. I’ve seen that before when I was looking to make a purchase.
It sounds like the title company tried to pay the tax and register the documents and they were asked for more money because of the buildings classification.
**If they are requesting more money to pay the tax, then they can also provide you a receipt for the tax you are paying. New documents would have to be prepared by your attorney as you need them for tax purposes.
Sounds odd. My 4 family was/is classified as “residential” for all purposes, mortgage and other.
4 family is residential.
5 family is commercial