Who Pays Closing Costs in Delaware: Buyers or Sellers?

In Delaware, both the buyer and the seller pay closing costs. The largest single charge is the 4% realty transfer tax, which is customarily split down the middle, and from there each side covers the fees tied to its own role in the transaction. On a $400,000 home, that transfer tax alone comes to $16,000, with roughly $8,000 falling on each party. Buyer closing costs beyond the down payment usually land near 3% of the purchase price.

The Transfer Tax Is Split 50/50

Delaware imposes a 3% state realty transfer tax, which drops to 2.5% in any county or municipality that has adopted the full 1.5% local transfer tax the state permits.¹ Virtually every locality has, so the combined rate on most sales is 4% of the price or fair market value.²

The statute requires the 2.5% state portion to be apportioned equally between seller and buyer, so each owes 1.25% to the state.¹ The 1.5% local piece follows the same even-split custom. Net effect: each side pays about 2% of the sale price in transfer tax. The tax is due when the deed is presented for recording at the county recorder’s office, and without payment the deed will not be recorded.³

One quirk worth knowing: if the purchase contract is silent on who pays the transfer tax, Delaware law puts the entire bill on the seller.⁴ In practice this almost never happens, because standard contracts spell out the 50/50 split and settlement attorneys build it into the closing disclosure by default.

What the Buyer Typically Pays

Beyond the buyer’s half of the transfer tax, the costs tied to financing and taking ownership all fall on the buyer’s side of the settlement statement:

Loan origination charge, appraisal, and credit report fees from the lender.
Title insurance. A lender’s policy is required for any financed purchase; an owner’s policy is optional but protects you against claims predating your ownership. Combined premiums generally run $500 to $2,000.⁵
Prepaid items: homeowner’s insurance, the initial escrow deposit, and prorated property taxes from the closing date forward.
Home inspection, which is not legally required but typically costs $300 to $500.
Appraisal, usually $300 to $600 for a standard single-family home when the purchase is financed.

Delaware also requires a licensed Delaware attorney to conduct every real estate closing, a rule that comes from a state Supreme Court ruling. The attorney runs the title search, prepares the deed, holds escrow, and oversees signing. Fees generally run $800 to $1,500, with complex transactions higher. The buyer typically covers these settlement services, though the deed preparation portion traditionally sits on the seller’s side.

County recording fees are also the buyer’s charge. Sussex County, for example, bills a $30 document surcharge, a $1 maintenance fee, and $9 per page for both deed and mortgage.⁶ New Castle and Kent counties use the same structure with slightly different amounts.

What the Seller Typically Pays

The seller’s side of the statement is shorter but can be larger in dollar terms because the real estate commission usually sits here:

The seller’s half of the 4% transfer tax.
Deed preparation.
Payoff of any existing mortgage, plus the lender’s satisfaction fee.
Real estate agent commissions.
Prorated property taxes through the day before closing.

Property tax proration catches people off guard. The settlement attorney divides the annual bill by day: the seller covers January 1 through the day before closing, and the buyer takes it from there. If the seller already prepaid taxes beyond the closing date, the buyer reimburses that overlap at the table.

First-Time Buyers Get a Tax Break

Delaware reduces the buyer’s share of the state transfer tax by 0.5% for first-time homebuyers, dropping it from 1.25% to 0.75%.⁷ The reduction applies to the first $400,000 of value and caps at $2,000. On a $350,000 purchase, that saves $1,750. On a $500,000 purchase, the savings stop at $2,000.

To qualify, you must have never held any direct ownership interest in residential real estate, and you must intend to live in the home as your principal residence within 90 days of closing.⁷ There are no income limits. You claim the credit at closing; no separate application is required. The credit only reduces the buyer’s share. The seller’s portion is unaffected.¹

When the Transfer Tax Does Not Apply

Some property transfers skip the 4% tax entirely. Delaware law exempts, among others:⁸

Transfers between spouses.
Transfers between a parent and child (or the child’s spouse).
Post-divorce transfers between formerly married people, if both acquired the property before the final decree.
Transfers to or from a trust where the person transferring is also the beneficial owner.
Conveyances to or from the federal government, the State of Delaware, or their political subdivisions.
Parent-subsidiary transfers between a company and its wholly owned subsidiary with no money changing hands.
Wills and transfer-on-death deeds.
Correctional deeds that fix errors in a prior deed with no payment.

Sales where the actual value is under $100 are also exempt.¹ If your transaction fits one of these categories, the settlement attorney notes the exemption on the realty transfer tax return filed with the Division of Revenue. A parent deeding a house to a child, for instance, owes nothing in transfer tax.

You Can Negotiate Who Pays What

Every line on the closing statement is negotiable through the purchase contract. The most common tool is a seller concession: the seller credits a dollar amount or percentage toward the buyer’s closing costs, reducing the cash the buyer brings to settlement. A contract could put the full 4% transfer tax on the seller, or shift deed preparation to the buyer. Whatever the parties agree to has to be written into the contract, and when financing is involved the lender has to approve it.

How much a seller can contribute depends on the buyer’s loan type:

Conventional (Fannie Mae): 3% of the sale price with less than 10% down, 6% with 10% to 25% down, and 9% with 25% or more down. Investment properties are capped at 2%.⁹
FHA: Up to 6% of the sale price regardless of down payment size.
VA: Up to 4% of the sale price for concessions beyond standard closing costs.

Concessions over these ceilings get deducted from the sale price for underwriting, which can shrink the loan amount or trigger additional appraisal review.⁹ If you want anything other than the standard Delaware split, say so in the contract. The default is the 50/50 transfer tax division and the standard allocation of fees described above.

1
Justia. Delaware Code Title 30 Section 5402 – Rate of Tax; When Payable; Exception
2
State of Delaware. Realty Transfer Tax
3
State of Delaware. Delaware Realty Transfer Tax Return and Affidavit of Gain and Value Form RTT-TAX Instructions
4
Delaware General Assembly. Delaware Code Title 30 Chapter 54 Subchapter I – Section: 5412
5
Consumer Financial Protection Bureau. What Is Owner’s Title Insurance?
6
Sussex County. Recorder of Deeds Fee Schedule
7
Division of Revenue – State of Delaware. First-Time Home Buyer Tax Credit
8
Delaware General Assembly. Delaware Code Title 30 Chapter 54 Subchapter I – Section: 5401
9
Fannie Mae. Interested Party Contributions (IPCs)