Residential vs. Commercial Brownstone
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
Reach out to me, and I can clarify this for you.
cgman2 is correct on the percentages but take into consideration that the lender will pay .25% of that.
4 family houses are considered residential by banks/Fannie mae/Freddie mac etc… 5 units and more is considered commercial to them.
NYC actually recognizes 4 units and above as commercial so there is the issue.
When did you start your mortgage? If it was after Jan 1st of this year your GFE is binding and charges such as Mortgage recording tax have zero tolerance. Go back to your original GFE and if the number is less than you actually paid or the increased charges then the LENDER has to cover the difference by law. If they disclosed to you the actual correct charges then you don’t have a leg to stand on because they will produce the signed document showing that you were aware of the charges.
Good Luck and I hope it works out for you.
Adam Dahill
WCS Lending
adahill@wcslending.com
There is a different rate for the ny state mortgage recording tax for a three family (%2.15) versus a four family (%2.65). Maybe it was accidentally recorded at the lower rate. It will be difficult to avoid paying the man.
Oh, one other thing. If this were “commercial,” you couldn’t have gotten a standard mortgage. You would have had to get a commercial mortgage, and those are a hassle so you would have been aware. Perhaps the extra tax is merely for it being multiple family.
Yes, a building can be “residential” but commercial for purposes of the mortgage, utilities, insurance, etc. Anything over 3-family is a multiple dwelling. But I believe actual commercial designation starts at 5 family, not 4.
Either way, if you closed, how can they come back after the fact? How can a title closer make a mistake? That sounds odd.