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By Nashville Indiana Title Company
The Closing Costs You Pay Versus the Ones the Seller Covers You're sitting across from us at the table on a closing on a cabin off Salt Creek, the pen s...
You're sitting across from us at the table on a closing on a cabin off Salt Creek, the pen still warm in your hand, and you flip to the settlement statement. There's a column of numbers with your name on it and a column with the seller's. The natural question, the one almost everybody asks, is simple: why is that one theirs and this one mine?
Fair question. In Indiana there's no single law that carves every fee in stone and hands half to each side. A lot of it comes down to custom, some of it comes down to what your purchase agreement says, and some of it is just how a particular loan works. Let's walk the two columns so nothing on that statement is a surprise.
If you're the one getting a mortgage, most of the loan-related costs are yours. That's the biggest chunk. Your lender charges an origination fee, maybe points if you bought the rate down, plus an appraisal fee and a credit report fee. These follow the loan, and the loan is yours, so they sit with you.
Then there's the money you prepay to set up your escrow account. Your first year of homeowner's insurance often gets paid at closing, and the lender collects a few months of property taxes and insurance to seed the escrow cushion. On a wooded property near Brown County State Park, that insurance number can run a little different than a subdivision home in Indy, because you're insuring a structure in the trees, sometimes with a detached garage or a well house. None of that is a problem. It just means the escrow setup line reflects the actual property, not an average.
The lender's title insurance policy is usually the buyer's cost too, because the lender requires it to protect their stake in the loan. We'll talk about the owner's policy in a second, because that one's a little more interesting around here.
You'll also see recording fees for your mortgage, and depending on how the deal was written, part of the settlement or closing fee. When we record your deed and your mortgage with the Brown County Recorder, those recording charges are real line items, and typically the buyer covers the recording of the documents that put the property in their name.
The seller carries the costs of getting the property clean and clear so it can pass to you. Top of that list: paying off their existing mortgage, along with any liens against the property. If there's an old lien from a contractor or a judgment sitting on the title, the payoff comes out of the seller's proceeds. That's part of what our title search turns up before we ever get to the table.
The seller also generally pays the real estate commission for both agents, which is often the single largest number on their side. And here in Indiana, sellers typically cover the prorated property taxes for the portion of the year they owned the place. Indiana pays taxes in arrears, meaning you're paying for a period that's already passed, so the settlement statement splits the current tax bill by the calendar. The seller credits you for the days they lived there, you pay the bill when it comes due. It sounds backward the first time you see it. It's normal.
The owner's title insurance policy is where Brown County has its own habit. In a lot of Indiana transactions, the seller pays for the owner's policy as a way of guaranteeing they're delivering good title. That policy protects you for as long as you own the place, against title problems that predate your purchase... a boundary that doesn't match the old fence line, an easement nobody mentioned, an heir who surfaces claiming a piece of the family acreage. Who pays for it is negotiable, and it should be spelled out in the purchase agreement, so read that line before you assume.
Some fees don't have a home until the two sides decide. The closing or settlement fee can be split, assigned to one party, or handled however the agreement reads. Same with the state's transfer paperwork. If a survey is required because the legal description references something like a creek bed that shifted, or a fence that doesn't quite follow the deed, who pays for that new survey gets negotiated in the offer.
This is why the purchase agreement matters more than any rule of thumb. When someone tells you "the seller always pays for X," what they mean is the seller usually does, in most deals, absent language saying otherwise. Your contract wins over custom every time. If you and the seller agreed to something different, that's what shows up on the statement, and that's what we honor.
By the time you sit down with us, we've already reconciled every one of these numbers. We ran the title search, cleared the payoffs, prorated the taxes to the day, and lined up your side and the seller's side on one document so both parties see exactly where the money goes. Nothing gets moved out of escrow until it all balances.
The reason we go line by line with you, instead of just pointing at the signature blocks, is that this is likely the biggest transaction you'll do this year, and you deserve to understand it. If a number looks off, we'd rather catch it at the table than after you've got the keys. Ask us about anything on either column. That's the whole point of doing your closing here rather than through a name you'll never meet again... we're the folks on the square, and you can walk back in and ask a question next week.
So when you flip to that statement and see your column and the seller's column, you'll know most of what's on each before you even read it. Your loan costs, your escrow setup, your recording. Their payoffs, their commissions, their share of the taxes. And the handful in the middle that came down to what you two agreed to when you wrote the offer.