Real Estate Services for Sellers

The Seller of property is required to provide a deed, typically a Warranty Deed, to the person who is buying their property. That warranty deed is a legal contract, and it contains a number of promises that the seller is making to the buyer. One of those promises is that the property is free from all claims and encumbrances. We prepare the documents required at the closing, and work with the buyer’s attorney in regard to questions or concerns about the title to the property.

The sale of property which is not a principal residence of the seller, or will not become the principal residence of the buyer, may subject the seller to a special Vermont Land Gains Tax (“VLGT”) if the Seller has not owned the property at least six years. The VLGT is not the same as the federal or state income tax. The tax is computed based on a formula taking into account the profit made from the sale of the land, (the VLGT is not imposed on the profits from the sale of the buildings) and the amount of time the property was owned. This tax may also be incurred if the property exceeds ten acres in size, even though it was used as a primary residence. We prepare the necessary forms, and do the computations as part of our representation of the seller.

If the seller is not a resident of the State of Vermont, and/or the United States, a special withholding tax on the proceeds from the sale of property is imposed. The State withholding rate is a maximum of two and one–half percent (2.5%) of the total sale price of the property. The Federal withholding rate is a maximum of ten percent (10%) of the sale price. The applicable regulations provide that the amount of the withholding may be reduced if it can be shown that the tax liability is less than the amount of the withholding. To do that we must prepare and file an application for both the State and Federal withholding. If no exemption is filed, the funds that are withheld are either applied to one’s income tax liability from the sale of the property or returned when one files his or her income tax return.

If a seller does not already have an Owners Policy of Title Insurance in effect, we offer the opportunity to obtain one prior to the closing on the sale of the property. It may seem strange that we would recommend that one insures his/her property when about to sell it, but it is not. As we indicated, the deed one delivers to the closing includes a number of promises to the buyer, including a promise that the title is good, and that there are no encumbrances on the property. These promises last for at least fourteen years from the date the deed is delivered, and perhaps longer. In general, it is unlikely that a seller would have a problem in the future, because someone claims that title was not good for the property. In the event it happens, however, an owner’s title insurance policy will protect the seller’s interests if there is ever a claim made against the seller for a defect in the title, whether or not the claim has a legitimate basis. The premium is due at the time of purchase only, and the policy remains in effect for as long as one may be held liable for a problem with the title.