Closing Headaches — Exhibit A
It’s not the biggest mistake Sellers can make — the maximum exposure is typically “only” a couple hundred dollars — but it’s still a headache that can delay if not jeopardize closing.
The mistake?
Representing that a non-homesteaded home is in fact “homesteaded.”
Background
What’s the distinction — and why does it matter?
At least in Minnesota, the government cum taxman distinguishes between principle residences . . . and everything else (2nd homes, investment property, etc.).
Depending on how you look at it, either the former qualifies for a (negligible) property tax discount, or the latter are assessed a slight premium.
In the standard Minnesota Purchase Agreement, if the Seller indicates that the property is non-homestead, the Buyer and Seller must then decide if the Seller is to pay any of the difference between non-homestead and homestead taxes.
If the “homestead” box is mistakenly checked . . . the Buyer and Seller have to address that issue prior to closing.
P.S.: “Homestead” status can also qualify homeowners for lower insurance premiums.
