Who pays closing costs in Virginia?
Whoever the purchase contract says, with one statutory exception. Virginia law assigns the grantor's tax to the grantor, the seller, and even that one can be moved: the grantor and grantee may arrange for the buyer to pay all or part of it. Every other closing cost, including the state recordation tax and title charges, falls where the contract puts it, and lender charges follow the loan's terms.
One charge has a payer written into the Code, and the same sentence lets the parties move it
Of the Virginia statutes on this page that touch a closing, exactly one says who pays. It is the grantor's tax on the deed, and the sentence that assigns it also undoes the assignment.
The tax imposed by this section shall be paid by the grantor, or any person who signs on behalf of the grantor, of any deed, instrument, or writing subject to the tax imposed by this section; however, the grantor and grantee may arrange for the grantee to pay all or a portion of the tax.
Va. Code 58.1-802
In a sale the grantor is the seller, so the seller pays unless the contract moves some or all of it to the buyer. That makes the grantor's tax a default, not a fixed rule, and among the statutes on this page it is the only closing charge with a payer named at all. Its rate, how it is figured and the cases where it does not apply are worked through in what the grantor tax in Virginia is.
The state recordation tax is levied on the deed, and its statute names no payer
The second tax at the recording desk has a rate and a base in its statute, and no payer.
On every deed admitted to record, except a deed exempt from taxation by law, there is hereby levied a state recordation tax. The rate of the tax shall be 25 cents on every $100 or fraction thereof of (i) the consideration of the deed or (ii) the actual value of the property conveyed, whichever is greater.
Va. Code 58.1-801
Section 58.1-801 levies the tax on the deed and sets the rate and the base. It does not name who pays. So the split of the state recordation tax is a contract term, not a Virginia rule in either direction.
The recording-desk summary on the Hillsville, VA area page covers the two state taxes on a deed and what the deed has to show. Two more pieces belong in any tally:
- A local recordation tax, where adopted. Va. Code 58.1-3800 authorizes a city or county to impose one equal to one-third of the state recordation tax, on the first recording of a taxable instrument there. Whether Carroll, Grayson, Wythe, Pulaski, Montgomery, Floyd or the City of Galax has done so is a question for the circuit court clerk's office that records deeds there, which for land in Galax is the Carroll or Grayson office where that land was recorded before Galax became a city.
- Where the grantor's tax goes. The clerk returns half of it to the state treasury and half to the treasury of the locality.
In Carroll County the Clerk of the Circuit Court's office handles land records and recording at 605-1 Pine Street, A230, Hillsville, 276-730-3070.
A buyer's loan adds its own costs, and the lender has to estimate them in writing
When the buyer borrows, a second set of charges arrives with the loan. Their amounts come from the lender, and on a consumer mortgage the paperwork that shows them is federal.
The Consumer Financial Protection Bureau describes mortgage closing costs as all the costs paid at closing, including origination charges, appraisal fees, credit report costs, title insurance fees and other fees the lender requires or that are paid as part of the mortgage transaction, and it says lenders must summarize them in the Loan Estimate. The fuller definition of the term is under closing costs.
Later in the process the Closing Disclosure takes over with the final loan figures, and when it has to reach the borrower is covered in how long closing takes on land.
The loan also brings a recording charge of its own. Except as Va. Code 58.1-803 provides otherwise, the recordation tax on a deed of trust is 25 cents on every $100 of the obligation it secures; for a credit line deed of trust the base is the maximum amount that may be outstanding at one time. The rate is statutory. Who bears it is a question for the contract and the lender.
Title charges and deed preparation follow the contract and whoever each side hires
Title work sits between the two sides. The buyer and the buyer's lender rely on it, a residential deed has to mention it, and none of the statutes on this page assigns its cost.
The CFPB lists title insurance fees among the closing costs in a mortgage transaction. Virginia's recording statute, 17.1-223 B, reaches title insurance on the face of the deed: a deed conveying residential property of not more than four dwelling units has to state on its first page the name of the title insurance underwriter insuring it, or that the existence of title insurance is unknown to the preparer. That is a disclosure requirement, not a rule about who buys the policy. What a title policy on land covers, and its premium, belong to what title insurance on land is.
A seller can also add a cost of the seller's own choosing. Under Va. Code 55.1-1006 a seller may retain a Virginia-licensed attorney to represent the seller's interests in the closing, and that representation may include deed preparation, fee negotiation and review of documents. A cost a party takes on by hiring its own professional is that party's arrangement with that professional.
Some lines move money between buyer and seller instead of paying anyone new
Not every line on a closing statement is a cost paid to a third party. Some are adjustments between the two sides, and they are easy to mistake for fees.
One of these on a land sale is the year's real estate taxes. A proration credits whichever side paid for days the other side will own, and how that split is set is covered in how property taxes are prorated at closing. Land enrolled in a use value program can also raise rollback taxes, a separate tax with separate rules, taken up in who pays rollback taxes when land sells.
The buyer's deposit is the other one people ask about. Where a real estate firm holds it, 18VAC135-20-181 B 5 says that, unless all principals agree in writing, expenses incidental to closing, such as appraisal, insurance and credit report fees, are not deducted from a deposit or down payment. How the deposit is applied at closing is set by the contract.
Where each line's payer is decided, and where it shows up before anyone signs
Put the pieces side by side and the pattern is plain: the Code sets rates and one default, and the contract does nearly everything else.
| Charge | What decides who pays | Who answers questions about it |
|---|---|---|
| Grantor's tax | Va. Code 58.1-802: the grantor, unless the parties arrange for the grantee to pay all or part | The contract; the settlement agent |
| State recordation tax on the deed | Not assigned by Va. Code 58.1-801; the contract | The contract; the settlement agent |
| Local recordation tax | Applies only where the locality has adopted it under Va. Code 58.1-3800; the payer is a contract term | The Clerk of the Circuit Court |
| Recordation tax on a deed of trust | Rate set by Va. Code 58.1-803; the payer is for the contract and the lender | The lender; the settlement agent |
| Lender charges | The loan terms; on a consumer mortgage, estimated in the Loan Estimate and finalized in the Closing Disclosure | The lender |
| Title insurance and title work | The contract and the lender's requirements | The settlement agent |
| Real estate tax proration and any rollback taxes | The contract, and for rollback taxes the rules on their own page | The settlement agent; the commissioner of the revenue |
Those lines come together on the settlement statement. How to read it, top to bottom, is explained in what a settlement statement is. The time to question a line is when the contract is being written, because by the time the statement is printed the split has already been agreed.
Selling land and unsure how the costs at a Virginia closing will split?
Send the county and the tract. Lowell can give an opinion of value on the land and name who answers each line, while the split itself is written into your contract and applied by the settlement agent. No cost, no obligation.
Got it. Thank you.
We'll be in touch shortly with an honest read.
Questions this raises
Does Virginia law make the buyer pay the recordation tax?
Not by statute. Va. Code 58.1-801 levies the state recordation tax on every deed admitted to record, except a deed exempt from taxation by law, and sets its rate and base, but it does not name a payer. Who bears it is decided in the purchase contract.
Does a county add its own recordation tax on top of the state's?
It can. Va. Code 58.1-3800 authorizes a city or county to impose a local recordation tax equal to one-third of the state recordation tax on the first recording of a taxable instrument there. Whether a particular county or the City of Galax has adopted it is a question for the circuit court clerk's office that records deeds there, not something to assume from a neighboring county.
Can closing expenses be taken out of the buyer's earnest money?
Not from a deposit a real estate firm holds, unless all principals agree in writing. 18VAC135-20-181 B 5 says expenses incidental to closing, such as appraisal, insurance and credit report fees, must not be deducted from a deposit or down payment held under that regulation. How the deposit is applied at closing is set by the contract.
Where this page's facts come from
Every rule, office and figure above traces to one of these. Rules change; check the office before you act on one.
- Va. Code 58.1-802, the grantor's tax Virginia General Assembly
- Va. Code 58.1-801, the state recordation tax on deeds Virginia General Assembly
- Va. Code 58.1-803, recordation tax on deeds of trust Virginia General Assembly
- Va. Code 58.1-3800, local recordation taxes Virginia General Assembly
- Va. Code 17.1-223 B, first-page statements on a deed Virginia General Assembly
- Va. Code 55.1-1006, the seller's own attorney at closing Virginia General Assembly
- 18VAC135-20-181 B 5, closing expenses and deposits Virginia Real Estate Board
- Mortgage key terms: closing costs Consumer Financial Protection Bureau
- What is a Closing Disclosure? Consumer Financial Protection Bureau
- 12 CFR 1026.19(e), good faith estimates Consumer Financial Protection Bureau (eCFR)
- Clerk of the Circuit Court: land records and recording Carroll County, Virginia