Closing costs in Michigan: who pays what, and what the statutes actually say

Sell a house in Niles and the settlement statement carries a line that a seller five miles south in South Bend never sees: Michigan's real estate transfer tax, in two pieces, state and county. Add Michigan's habit of billing property tax twice a year — a summer bill and a winter bill — and a Michigan closing reads differently from an Indiana one even when the title company, the lender and the house are the same.

This guide is the Michigan side on its own: which costs are set by statute, which are custom, and which are simply negotiable. For the two-state overview with regional budget ranges, see closing costs across Michiana; for the Indiana counterpart, closing costs in Indiana.

The short version: who pays what

Anything marked "custom" can move to the other column in the purchase agreement. The transfer taxes are different: Michigan law puts the liability on the seller, not local habit.

Transfer tax: the line Indiana doesn't have

Michigan charges two transfer taxes when a deed is recorded. The state tax under the State Real Estate Transfer Tax Act is $3.75 for each $500 of value or fraction of $500. The county tax is 55 cents per $500 in any county under 2,000,000 people — which covers Berrien, Cass, St. Joseph, Van Buren and every other county in this corner of the state. Together that is $8.60 per $1,000. Both acts name "the person who is the seller or grantor" as the one liable, and the state tax is due to the county treasurer within 15 days of delivery of the deed — in practice, the title company collects it at closing and pays it when it records.

Applied to median sale prices from the market report (through June 2026):

Two details are worth knowing. Mortgages and other security instruments are exempt from both taxes, so Michigan has no mortgage recording tax layered on the buyer. And the state portion has a principal residence exemption: if the seller claimed the principal residence exemption and the home's state equalized value at sale is equal to or lower than it was when the seller acquired it, the state tax does not apply. After years of rising values few sellers qualify, but the statute also lets a seller who paid and later realizes they were eligible request a refund from the Department of Treasury. Ask the title company to compare the two SEV figures. The county tax has no such exemption. Taxes on selling a house in Michigan covers the exemption and the capital gains question in depth.

Title insurance: the seller buys the buyer's policy

By Michigan custom the seller pays for the owner's title insurance policy, which protects the buyer, and the buyer pays for the lender's policy that the mortgage requires. None of this is statutory, so it can be negotiated like any other term. Get the title company's rate quote before you sign, because the owner's premium is priced on the sale amount and is usually the second-largest seller line after the transfer tax. Choosing a title company covers what the commitment should show.

Summer and winter taxes at the closing table

Michigan property tax arrives in two bills. The summer bill goes out in early July and, by default, is payable without interest through September 14; the winter bill follows on December 1 and is due by February 14. Some city charters move those dates, so check the local treasurer's calendar for the parcel.

The statutory default and the local custom

If the purchase agreement says nothing, the General Property Tax Act supplies the answer: the seller is responsible for the portion of taxes levied during the 12 months before closing, from each levy date up to the day title passes, and the buyer takes the rest. In effect, taxes are treated as paid in advance from the date each bill becomes due. Most agreements instead choose a method — commonly a "due date" or a "fiscal year" basis — and the choice can shift real money between the parties. County treasurers in Michigan describe proration as a negotiated term and a local custom that varies from county to county, so ask the title company in Berrien, Cass or St. Joseph County which convention it applies before you sign, not after.

The practical effect for a seller: close in August after paying a summer bill in July, and the buyer typically credits you for the months of that bill you won't own the house. Close in June with the summer bill not yet issued, and the credit usually runs the other way. The Michigan purchase agreement guide walks the proration clause word by word.

Recording and the forms that ride along

Michigan's register of deeds charges a flat $30 to record a document regardless of page count — the deed, the buyer's mortgage and the discharge of the seller's old mortgage are each a separate $30 filing. Two tax forms travel with every closing and cost nothing to file, but missing them is expensive:

• Property Transfer Affidavit (Form 2766). The buyer files it with the city or township assessor within 45 days of the transfer. Late filing carries a $5-a-day penalty, capped at $200 for a principal residence.
• Principal Residence Exemption affidavit. Whoever prepares the closing statement is required to hand buyer and seller the exemption and rescission forms. Filing the exemption is what keeps an owner-occupant from paying the school operating millage that non-homestead property carries.

Both are covered in the homestead exemption guide, including why the buyer's first full tax bill is usually higher than the seller's.

The buyer's column

Buyer costs look like buyer costs anywhere: loan charges, the appraisal, the lender's title policy, recording, and prepaid escrow deposits. The Michigan-specific trap is the escrow estimate. A lender that seeds the escrow account from the seller's current tax bill will be short after the taxable value uncaps the year after purchase, and the payment jumps at the first escrow analysis. Ask the lender what taxable value it used. Getting pre-approved by more than one lender is the cheapest way to see the spread in origination charges.

A worked seller example

A Niles seller at the $195,000 median sale price, paying off a mortgage, with no brokerage involved, should expect roughly these lines: $1,677.00 in combined transfer tax; the owner's title premium at the title company's quoted rate; a closing or settlement fee, often split; $30 to record the mortgage discharge; any water or sewer final bill; and the tax proration, which can be a debit or a credit depending on the month. The settlement statement walkthrough shows how to check each line.

If a commission were added at a conventional rate, it would exceed the transfer tax several times over. That is the one line in this example that is entirely optional, and it is why what it costs to sell puts it first.

Michigan against Indiana, same house

At the closing table the difference is almost entirely the transfer tax: Indiana charges none, Michigan charges $8.60 per $1,000. Both states close through title companies without requiring an attorney for a routine residential sale. The tax mechanics differ more than the costs — Indiana bills in arrears, Michigan in two bills treated as paid in advance — which changes the direction of the proration rather than its size. Indiana vs Michigan in Michiana sets the whole comparison out, taxes and all.

Closing a Michigan sale without a brokerage

The title company does the same work whether or not agents are involved: the search, the commitment, the transfer tax, the recording and the disbursement. What falls to you is the paperwork a brokerage would otherwise assemble — the signed purchase agreement, the statutory seller's disclosure delivered before the agreement binds, and the dates. Closing direct lays out the calendar, and selling direct covers everything before it. MichianaRealty.com™ publishes its town-level sale prices monthly, which is enough to estimate the transfer tax on your own house before you list.

Frequently asked questions

Who pays closing costs in Michigan?

By custom the seller pays the state and county transfer taxes, the owner's title insurance policy and the discharge of their own mortgage, while the buyer pays loan costs, the lender's title policy, recording of the deed and mortgage, and prepaid escrows. Michigan law makes the seller liable for the transfer taxes; everything else is custom and can be reassigned in the purchase agreement.

How much does it cost to sell a house in Michigan?

Without a commission, the largest seller cost is usually the transfer tax at $8.60 per $1,000 of sale price — $1,677 on a $195,000 Niles sale and $3,233.60 on a $376,000 St. Joseph sale — followed by the owner's title policy, a settlement fee, a $30 recording fee for the mortgage discharge and the property tax proration. A conventional commission, where one applies, typically exceeds all of those combined.

How much is the transfer tax in Michigan?

The state transfer tax is $3.75 per $500 of value or fraction of $500, and the county transfer tax is 55 cents per $500 in counties under 2,000,000 people, which includes every county in southwest Michigan. Combined, that is $8.60 per $1,000. A principal residence whose state equalized value has not risen since the seller acquired it can be exempt from the state portion.

How are property taxes prorated at closing in Michigan?

Usually as the purchase agreement specifies, commonly on a due-date or fiscal-year basis. If the agreement is silent, state law makes the seller responsible for taxes levied in the 12 months before closing from each levy date up to the day title passes, which treats the summer and winter bills as paid in advance. Customs vary by county, so ask the title company which convention it uses.