The offer will be prepared by the Selling Realtor on the standard Board of Realtors Contract of Sale form and presented to you by your Listing Realtor. The offer may be accepted as is and executed or a counter offer may be made by you by striking out unacceptable terms and inserting the desired price or other term and initialing the changes. At the point that everyone has agreed on all terms and initialed all changes, a Contract is in place. Prior to a fully executed Contract of Sale, you may consider and accept any other offer that is presented.
Use of Attorneys
The Virgin Islands is considered an “attorney state” or, in our case, territory. Attorneys handle the closings rather than escrow companies. Both the Buyer and the Seller retain and pay for their own attorneys. Your attorney will review the Contract of Sale form for you; prepare the deed: secure any necessary releases such as a release of mortgage and represent you at closing. If you will not be attending the closing, your attorney will have your Power of Attorney so that he can execute the necessary documents.
Standard Contingencies and the Contract Timeline
The typical contingencies are a structural and pest inspection (conducted by the Buyer and at Buyer’s expense) and a financing contingency, if applicable.
Typical timeframes and thresholds within the contract are:
- A 12-14 day period for the Buyers to conduct their inspections and in which to cancel if desired;
- A second deposit to escrow typically within 10-14 days and generally equal to 5-10% of the purchase price;
- Financing contingency to be satisfied typically within 45-60 days; and
- Closing 30-60 days (Cash transactions can close in 30 days or less. Transactions with financing generally take 60-90 days or more.)
Calculating Your Net
The seller is responsible for his attorney’s fees and typically the real estate commission. The transfer or stamp tax is a negotiable item. Though once considered entirely the Seller’s obligation, it may be split between the buyer and seller, or either party may pay the whole tax. If selling a home or land, the Seller will pay for the survey costs to place and locate the bound posts marking the perimeter of the land. Title insurance expense is borne by the Buyer.
Sometimes referred to as a transfer tax, this is paid to the Virgin Islands Government on all transfers of real estate. In the past, this had traditionally been a sellers’ expense; now, this is sometimes a shared expense between buyer and seller. For sales up to a value of $350,000, the tax is 2% of the sale amount; $350,001 to $1,000,000 the tax is 2 ½% and at $1,000,001 the tax goes to 3% of the value of the real estate.
Real Estate Commission
For the sale of a condo or home, the real estate commission is typically 6% of the purchase price. For the sale of a vacant lot, the real estate commission is generally10%; however, for a premium lot with a high sales price the commission may be less.
Both the Buyer and Seller are responsible for their own attorney’s fees. As the Seller, your attorney is responsible for preparing the deed and securing any documents required in order for you to convey your property, e.g., releases from any liens such as a mortgage, a letter from the Department of Finance indicating all property taxes are paid and, if selling a condominium, a letter from the condo association stating all fees are paid. If you will not be attending the closing, your attorney will attend and sign documents with a Power of Attorney from you authorizing him to act on your behalf.
Attorney’s fees vary so you should discuss this in advance. You will need to use a local attorney familiar with our laws and I would strongly encourage you to use an attorney who specializes in real estate.
If you are selling land or a home, your responsibility with respect to survey expenses will be to expose the boundaries of the property for the Buyer. The Buyers, if they are obtaining title insurance, will be required to have an as built survey completed that shows how the house and any other improvements sit on the property to insure there are no encroachment or set back issues. It is to both parties advantage to use the same surveyor and have the cost of the survey work divided accordingly. (Note; If you built your house and never had an as built survey done; or, you have made substantial additions or built additional structures on the property; or, your neighbor has made additions which appear close to your property line, you should have the boundposts flagged and/or an as built survey completed at the beginning of your listing to confirm there are no encroachment issues.)
Proration of Property Taxes
As in all jurisdictions, our property taxes are billed in arrears. Though not strictly speaking an expense of the sale, you will be giving a credit to the Buyer for any property taxes that rightly would be your obligation to pay, i.e., the amount of taxes owed from the last tax period you paid to the closing date. Keep in mind that if you have a mortgage, your lender in all likelihood has been escrowing the anticipated tax payment as part of your monthly mortgage payment so though you will take it out of pocket at closing, the excess escrow will be returned to you by the lender after closing.