Closing Headaches — Exhibit A
[Note to Readers: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.]
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.
Representing that a non-homesteaded home is in fact “homesteaded.”
What’s the distinction — and why does it matter?
At least in Minnesota, the government cum taxman distinguishes between principal 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.