Closing costs in Delaware: what buyers and sellers pay

Why there is no single “typical” total

Some Delaware closing costs are set by government: the transfer tax, the state recording add-ons and, for title insurance, a filing process that the Department of Insurance reviews. Others are set by private companies and vary: lender charges, appraisals, inspections, settlement and attorney fees, and surveys. Prorated property taxes and insurance deposits depend on your house, your closing date and your loan.

Two federal forms show the variable pieces. The lender must give you a Loan Estimate within three business days of your application, and you must receive the Closing Disclosure at least three business days before closing (Consumer Financial Protection Bureau). For a general walk-through, see closing costs explained.

Line by line: what each cost is

Realty transfer tax. The tax is due when the deed is recorded, on the greater of the price and the highest assessed value. The state share is 2.5% where the municipality or county has enacted its full 1.5% local tax, and 3% otherwise. Our transfer tax page explains who pays and the first-time buyer reduction, which is 0.5% of up to $400,000 (at most $2,000) on the buyer’s share.

Recording fees. The county Recorder of Deeds records the deed and the mortgage. In all three counties the recorder’s fees are set by county ordinance (9 Del. C. §§ 9617, 9619), so check the current schedule with the Recorder. On top of that, the recorder collects, for each document, a $5 Housing Development Fund surcharge and a $25 Delaware Cultural Access Fund fee (9 Del. C. § 9607(b)).

Title insurance. Delaware’s insurance rate chapter applies to title insurance (18 Del. C. § 2502(a)(5)), and the Department of Insurance lets a Delaware Title Insurance Rating Bureau file rates for its member insurers. Insurers outside the bureau file rates directly with the Department (Bulletin No. 27). Payotte did not find a premium table to publish, so get a quote for your price. See title insurance explained.

Lender charges. Origination, appraisal, credit report and underwriting fees are set by the lender and its vendors. Compare them on the Loan Estimate. See also home appraisal cost and home inspection cost.

Seller’s affidavit and out-of-state sellers. A recorder may not accept a deed without an affidavit of residence and gain, unless the transaction is exempt from the transfer tax (9 Del. C. § 9605(d)). Before recording a deed from a nonresident individual, pass-through entity or corporation, the recorder collects any estimated Delaware income tax the seller reports as due (§ 9607(e)). Nonresident sellers should ask their settlement agent what to expect.

Prepaids and prorations. If your lender requires reserves for taxes and insurance, they fund your escrow account. In New Castle County, property taxes are due July 1 (9 Del. C. § 8601), so the amount prorated at closing depends on your date and the bill. See Delaware property tax.

Attorney and settlement fees. Neither the statutes nor the forms Payotte read set these fees. They come from your provider’s quote.

Who pays what in Delaware

State law fixes only part of the split. The transfer tax is “apportioned equally between grantor and grantee” (§ 5402(a)), while § 5412 says that between the parties, absent an agreement to the contrary, the grantor bears the burden. The local tax is paid by the transferor or the transferee as the city or county ordinance decides (22 Del. C. § 1601; 9 Del. C. § 8102). Everything else is set by your contract and the providers’ quotes, so the table lists what the sources settle.