Who Pays the Legal Fees at a Real Estate Closing in Puerto Rico?

One of the most common questions we receive from both buyers and sellers is:"Who pays the legal fees at closing and how much is it?"

While every transaction can be negotiated differently, Puerto Rico has customary practices that are followed in most residential real estate transactions.

If you are planning to buy or sell a property, understanding these costs ahead of time can help you avoid surprises and better prepare for closing day.

Seller's Typical Closing Costs

In Puerto Rico, the seller is generally responsible for the expenses related to transferring ownership of the property to the buyer.

These costs typically include:

1. Deed of Sale Preparation

The seller usually pays the notary fees associated with preparing and authorizing the Deed of Sale ("Escritura de Compraventa"). It can be from .5%-1% of the sales price, depending on the notary.

2. Property Registry and Title Documentation

The seller is generally responsible for obtaining:

• Property Registry certifications

• Evidence of clear title

• Documentation necessary to prove ownership and marketable title

3. Cancellation of Existing Mortgages

If the seller has an outstanding mortgage, the seller is usually responsible for:

• Paying off the mortgage balance

• Mortgage cancellation deed fees (notary fee from .5%-1% of mortgage)

• Recording fees associated with cancelling the lien

4. Property Taxes, HOA Fees

Any unpaid obligations up to the closing date are usually prorated and paid by the seller, including:

• CRIM property taxes

• Homeowners Association fees

• Other liens or obligations affecting title

Buyer's Typical Closing Costs (Mortgage Financing)

When the buyer is obtaining financing, the buyer is generally responsible for all costs related to obtaining the loan.

These costs typically include:

1. Mortgage Deed Fees

The buyer usually pays for the preparation and execution of the mortgage deed required by the lender. Again, the notary fee for this is between .5%-1% of mortgage.

2. Loan Closing Costs

These may include:

• Bank origination fees

• Processing fees

• Underwriting fees

• Credit report fees

• Flood certification fees

• Administrative fees charged by the lender

3. Appraisal

The lender will require an appraisal, which is typically paid for by the buyer.

4. Property Insurance

Most lenders require hazard insurance before closing.

The buyer pays for the policy and any prepaid premiums required by the lender.

5. Title and Closing Certifications Required by the Bank

Depending on the lender, the buyer may be responsible for various certifications and reports required for loan approval.

6. Recording and Internal Revenue Stamps Related to the Mortgage

The buyer typically pays:

• Internal Revenue stamps

• Property Registry filing fees

• Recording fees associated with the mortgage deed

7. Escrow Reserves

Most lenders collect reserves at closing for:

• Property taxes

• Hazard insurance

• Flood insurance (if applicable)

These funds are deposited into the buyer's escrow account.

Every real estate transaction is unique, and closing costs can vary depending on the lender, the municipality, the property's value, and the terms negotiated between the buyer and seller.

Before signing a purchase agreement, I recommend that both parties obtain a detailed estimate of their expected closing expenses so there are no surprises on closing day.

If you're planning to buy or sell property in Puerto Rico and would like a personalized estimate of your closing costs, feel free to contact me. I would be happy to guide you through the process and help you understand exactly what expenses to expect before closing.

Have an amazing week!

Cordially,

Ivan Soto, C-20015

Ivan Soto Real Estate