Who Pays for What in a Conventional Loan Home Sale in California?

By Home Bay

Posted on September 29th, 2016

If you’re selling your home to a buyer who is taking out a conventional loan, you’re probably wondering what costs you’re going to have to pay at closing. This post will define some of the most common conventional loan costs that impact California home buyers and sellers and will explain who is responsible for paying each fee.


Here’s a quick introduction to some common closing costs in California:

  • Escrow Payment:
    An escrow payment includes your buyer’s property taxes and homeowner’s insurance premium. Though these two costs only come due once a year, they are typically lumped in on top of your buyer’s monthly mortgage payment to simplify things and to protect the lender. If a buyer’s annual homeowners insurance premium and property taxes add up to $2,400, their escrow payment will be $200 a month (on top of their mortgage).
  • Title Fee:
    Your buyers will receive the deed to your property at closing. A deed is a piece of legal paperwork stating that the seller transferred legal ownership of the home, known as the title, to the new owners. So what does the fee do? It actually pays to take out a title insurance policy for the buyer’s lender that covers any fees they incur if someone files a claim against the property. This could happen if the prior owner’s failure to pay property taxes, contractors claim they weren’t paid for work done on the home prior to closing or an ex-spouse claims the seller didn’t have the right to sell. Should any of these issues arise, the lender will have to mitigate the situation and their title insurance will cover any fees they incur.
  • County Transfer Taxes:
    Counties often charge property taxes and a change fee that covers the cost of transferring ownership and tax responsibilities to a new owner. The base transfer tax in California is $1.10 for every $1,000 of the home’s value.
  • City Transfer Tax:
    Similar to the county transfer tax, this fee is charged to cover the process of transferring ownership and tax responsibilities to a new homeowner. It’s is only applicable in certain cities and the amount varies quite significantly. Also similar to the county tranfer tax, this fee is calculated as a percentage of the total cost of the home.

Who Pays These Closing Costs?

As mentioned above, costs vary by county and in some cases, by city. That being the case, here’s an example of who pays what in Sonoma County, California:

  • The buyer pays the escrow and title fee.
  • The seller pays the county tax transfer fee.
  • The seller also pays city tax transfer fees if they reside in Petaluma or Santa Rosa.

Wondering who pays what in your area? This handy chart shows who pays what fees in various California counties. If you have questions about fees in your area, ask us!

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