December 18th, 2025 11:51 AM by Sam Kader NMLS# 130505
When reviewing your Loan Estimate, you may notice that transfer (also called excise) taxes are listed, even though the purchase agreement states that the seller is responsible for paying them. This can understandably raise questions.
The lender is required to disclose known transaction costs early, even if the seller is paying them. Escrow will correctly assign the transfer tax to the seller before closing, and you will not be charged for it
The most important thing to know is this:
Federal disclosure rules require lenders to show known transaction-related costs early in the loan process. Transfer taxes are a known cost associated with transferring ownership of the property, so lenders disclose them upfront for transparency—even when the seller is contractually responsible.
At the Loan Estimate stage, the lender does not control how costs are divided between buyer and seller. Showing the tax early ensures that all known items are disclosed and nothing is omitted. This is a standard and conservative industry practice.
Your escrow company prepares the final settlement figures and applies the purchase agreement. Before closing, the transfer tax will be:
Your final Closing Disclosure will reflect this correctly, and your cash-to-close will be adjusted so you are not paying the transfer tax.
Seeing transfer taxes on a Loan Estimate does not mean you are responsible for paying them. They are shown for disclosure purposes only. Escrow will ensure the charge is correctly allocated to the seller prior to closing.
If you ever have questions while reviewing your loan documents, we encourage you to ask. Understanding your numbers early helps ensure a smooth and confident closing.