By Molly Buttleman
Closing day may feel like the finish line, but for sellers, several of the most important steps happen well before signing. Transfer taxes, prorated property taxes, and Michigan's seller disclosure requirements all get sorted out ahead of the closing table, not during it. I go over each of these with sellers early, as surprises at closing are almost always the result of an issue that should have been addressed weeks earlier.
Key Takeaways
- Learn what the title company handles on a seller's behalf throughout closing.
- Understand how Michigan's transfer tax and property tax proration affect a seller's proceeds.
- Find out what Michigan's seller disclosure law requires before closing.
- Discover what to expect on closing day itself.
The Title Company Handles Most of the Closing Logistics
In Michigan, a title company typically manages the closing process on behalf of both parties. Its role goes well beyond simply hosting the signing appointment.
What the Title Company Manages for Sellers
- Conducting a title search to confirm the property can be sold free of unresolved claims
- Calculating and collecting transfer tax from the seller's proceeds
- Coordinating with the county register of deeds to record the new deed
- Disbursing funds to the seller, any lender being paid off, and other parties owed money from the sale
Because the title company handles these details, a seller isn't personally responsible for tracking down paperwork or contacting the county directly. Understanding what the title company is doing behind the scenes still helps sellers know what to expect and when.
Transfer Tax and Prorated Property Taxes Fall to the Seller
Michigan assesses both a state and a county transfer tax on the sale of real estate, and by long-standing custom, the seller typically covers this cost. Property taxes are also divided between buyer and seller based on how much of the tax year each one owned the home.
What Sellers Should Expect on Taxes at Closing
- A state and county transfer tax calculated based on the sale price
- Transfer tax responsibility that customarily falls to the seller, though it can be negotiated
- Property tax proration covering the portion of the year the seller owned the home
- These amounts deducted directly from the seller's proceeds at closing rather than billed separately
None of these costs are unusual, but they do reduce what a seller nets from the sale, which is worth planning around well before closing day. A closing statement will spell out exactly how these amounts were calculated.
Michigan's Seller Disclosure Requirements
Michigan law requires most sellers to complete a formal disclosure statement covering the property's condition. This document needs to be handled earlier in the process, not left until closing.
What Michigan's Disclosure Law Covers
- Known material defects in the home's structure, systems, and major components
- Property tax obligations that may change once ownership transfers
- Certain exemptions, such as some new construction or transfers between family members
- A requirement to provide the disclosure to buyers before an offer is finalized, not at closing
Because disclosure happens early in the transaction, it isn't something a seller needs to think about on closing day itself. Getting it right at the start avoids the kind of dispute that can slow down or unravel a sale much later. This overview covers how disclosure and closing generally work in Michigan, but specific tax and legal questions are best directed to an accountant or real estate attorney.
Frequently Asked Questions
Do I need an attorney present at my closing in Michigan?
Not usually. Michigan closings are typically handled by a title company rather than requiring an attorney, though a seller can choose to have one review documents if they'd like extra guidance.
What happens if an issue with the title turns up during the title search?
The title company will work to resolve it before closing, which can involve paying off an old lien or clearing up a paperwork issue with a previous owner. This is one of the reasons title searches happen well before the scheduled closing date.
Do I need to attend the closing in person as the seller?
Not always. Many sellers can sign documents remotely or ahead of time through the title company, especially if they've already moved out of the area. I can help sellers figure out what's realistic based on their specific situation.
Contact Molly Buttleman Today
A smooth closing usually comes down to groundwork handled weeks in advance, not decisions made at the table on closing day. Disclosure, taxes, and title work all need attention well before a closing date is even set.
If you're preparing to sell a home in Traverse City, connect with me,
Molly Buttleman. I’d be thrilled to walk you through the process.
