Seller's Responsibility in Property Transfers

By Trish Jackson
The buyer and seller can negotiate property closing cost responsibilities.
contract image by martin schmid from

When real estate is sold in the U.S. there are certain costs that have to be paid at the time of legal transfer, known as the "closing." Each state has its own rules and fees; some costs are normally paid by the seller, although sellers and buyers can negotiate the payment responsibilities prior to the closing. As a general rule, a seller can estimate that he will pay around 1 percent of the sales price, excluding the real estate commission.


When real property changes hands in the U.S., it is customary for an abstract or title search to be performed to review the property's history. The reason for this is to find out if there are any liens, mortgages, easements or defects that that may prevent the property from being sold. These are known as "clouds" on the title and have to be addressed before the sale can take place. The seller usually pays for the title search.

Title Insurance

Title insurance is issued when all clouds on the title have been resolved. Title insurance protects the buyer from any unrecorded liens or easements or other claims on the property not found in the abstract. A lien on a property is a claim for payment that has been attached by a court of law to the property and has to be paid before it can be sold. The seller usually pays for title insurance at the closing.

Real Estate Commission

The real estate commission is a fee charged by the real estate broker who has listed the property for sale. The seller enters into a contract agreeing to pay a set fee or percentage of the sales price to the brokerage upon closing. The commission covers sales and marketing costs and sales assistance by the brokerage. The commission is often split between the listing broker and the brokerage that represents the buyers, but is paid by the seller.

Recording Fees

A deed is used to legally record the transfer of ownership of real property. A warranty deed warrants that the seller has sold the property in good faith that it is free and clear of any claims of use or ownership other than those shown in the closing documents. Other deeds include a special warranty deed and quitclaim deed. The seller pays for the recording of the deed. The fee is based on a percentage of the sales price of the property.