Buying or selling in Lowry Hill comes with a lot of moving parts, and closing costs can be the hardest to pin down. If you have heard terms like deed tax, mortgage registry tax, or Environmental Response Fund and wondered what they mean for your budget, you are not alone. You want clarity in plain language so you can negotiate confidently and avoid surprises on closing day. This guide gives you just that: what each charge is, who usually pays, how to estimate the amounts, where to confirm current rates, and how to keep your Lowry Hill closing smooth. Let’s dive in.
Deed, Mortgage, and ERF: What they are
Deed tax (documentary or transfer tax)
The deed tax is a Minnesota state tax tied to the transfer of real property when you record a deed. It is typically based on the sale price or other consideration shown on the deed. Counties collect it at recording and remit it to the state.
Why it exists: It raises revenue and aligns with the public recording of changes in property ownership.
Mortgage registry tax
The mortgage registry tax is charged when a mortgage is recorded. It is calculated from the principal amount of the mortgage stated in the instrument. You will see it in purchase closings with new loans and in most refinances when a new mortgage is recorded.
Why it exists: It funds state and administrative costs connected to recording mortgage liens.
Hennepin County Environmental Response Fund (ERF) add-on
Hennepin County applies an ERF fee on most recorded deeds and mortgages countywide, including Lowry Hill. The ERF supports local environmental response and remediation efforts and related administration. Whether it applies, and the exact amount, is set by Hennepin County’s schedule.
How each charge is calculated
The exact rates and increments change periodically. Always confirm current figures on the Minnesota Department of Revenue and Hennepin County Recorder pages before you finalize a closing estimate. Use these templates to structure your calculations:
- Deed tax = ceiling(Consideration / INCREMENT_DEED) × RATE_DEED
- Mortgage registry tax = ceiling(MortgageAmount / INCREMENT_MORTGAGE) × RATE_MORTGAGE
- ERF add-on = as published by Hennepin County (flat fee or per-increment)
In many states and counties, deed and mortgage taxes are computed in set increments, such as per 100, 500, or 1,000 dollars of value. Minnesota and Hennepin County publish the specific increment and rate. Recording fees that are separate from these taxes also apply.
Example templates you can plug into
Use these structures with the current increments and rates:
Purchase example: Sale price = $PRICE; deed increment = $INC_D; deed rate = $R_D.
- Units = ceiling(PRICE / INC_D)
- Deed tax owed = Units × R_D
- Add ERF per county schedule
- Add county recording fees per document/page
Mortgage example: Mortgage amount = $M; mortgage increment = $INC_M; mortgage rate = $R_M.
- Units = ceiling(M / INC_M)
- Mortgage tax owed = Units × R_M
- Add ERF per county schedule
- Add county recording fees per document/page
When you prepare a closing estimate, show your math line by line so everyone can see how the numbers were derived.
Who typically pays in a Minneapolis closing
Custom varies by market and by deal, but these are common practices in Hennepin County residential transactions:
- Seller usually pays the deed tax in a purchase-and-sale closing.
- Buyer usually pays the mortgage registry tax when using a new loan.
- Parties can negotiate a different split. If you change the norm, put it in the purchase agreement to prevent misunderstandings.
- Lenders often require the borrower to pay mortgage-related taxes and recording charges on both purchases and refinances.
Title companies or closing attorneys normally collect these amounts at closing and submit them to the county recorder when the documents are recorded. Self-recording after closing is rare in residential deals, but if you do it, responsibility for the taxes and fees still applies.
What you will see on your closing statement
You should see these as separate line items so you can trace each charge to its source:
Seller side:
- Payoff of existing loans
- Deed tax, if seller is paying per contract
- Prorated property taxes
- Seller-specific closing and recording fees (for example, mortgage release recording)
Buyer side:
- Purchase price credit and loan proceeds
- Mortgage registry tax, if a new loan is recorded
- ERF add-on if applicable to your deed or mortgage
- Recording fees for the deed and mortgage
- Title insurance, lender fees, and escrow deposits
Ask your title company for a draft statement early so you can review allocations and math while there is still time to adjust.
Exemptions and special situations
Some transfers qualify for exemptions or alternative treatment, but the rules are specific and documentation is required at recording.
- Commonly exempt or reduced scenarios can include transfers involving government entities, certain non-profits, some intra-family transfers, divorce settlements, or transfers to and from a revocable trust.
- Deeds with nominal consideration language still may be taxed based on true consideration or fair market value unless an exemption applies.
- Refinances often trigger mortgage registry tax on the new mortgage amount, although certain instruments or structures may be partially exempt under Minnesota rules.
- Assumptions and mortgage satisfactions may involve separate fees under county schedules.
If you plan to claim an exemption, coordinate with your closing agent to prepare any required affidavits, exemption boxes on the deed, or supporting court or trust documents.
Where to confirm current amounts
Rates and increments change, so rely on official sources for current numbers and procedures:
- Hennepin County Recorder or Registrar of Titles: recording fee schedule and the ERF add-on amount and applicability.
- Minnesota Department of Revenue: statewide guidance for deed tax and mortgage registry tax, including how the tax is computed and how exemptions work.
- Minnesota statutes and administrative rules: legal definitions and statutory exemptions.
Your title company or a local real estate attorney can also provide sample Hennepin County closing statements that show typical phrasing and line placement.
Practical tips for Lowry Hill buyers and sellers
- Confirm rates early. Ask your title company for a preliminary closing statement that breaks out deed tax, mortgage registry tax, ERF, and recording fees.
- Put your allocation in writing. If you agree to shift who pays a tax or fee, add clear language to the purchase agreement.
- If you are refinancing, verify whether mortgage registry tax applies and whether any limited exemptions might reduce it.
- Prepare exemption documentation. Gather court orders, trust papers, or affidavits needed to claim exemptions before closing.
- Use local experts. A Hennepin County title professional can spot county-specific nuances and help you avoid last-minute surprises.
Quick walkthroughs you can customize
Use these plug-and-play steps with the current increments, rates, and the ERF schedule.
Purchase with financing
- Start with your sale price and compute deed tax:
- Units = ceiling(PRICE / INCREMENT_DEED)
- Deed tax = Units × RATE_DEED
- Compute mortgage registry tax on your loan amount:
- Units = ceiling(LOAN_AMOUNT / INCREMENT_MORTGAGE)
- Mortgage tax = Units × RATE_MORTGAGE
- Add ERF:
- Apply the ERF amount to your deed and mortgage as the county schedule requires.
- Add county recording fees:
- Include per-document and per-page charges for the deed and mortgage.
- Review total buyer and seller allocations per your contract and lender requirements.
Refinance
- Compute mortgage registry tax on the new mortgage:
- Units = ceiling(NEW_MORTGAGE / INCREMENT_MORTGAGE)
- Mortgage tax = Units × RATE_MORTGAGE
- Add ERF for the mortgage if applicable.
- Add recording fees for the new mortgage and any required satisfactions or assignments.
- Ask your title company if any limited exemptions apply and what documentation is needed.
Avoid common pitfalls
- Relying on outdated rates. Always check the current county and state pages before you finalize numbers.
- Assuming the contract default. If you want to change who pays a tax or fee, document it in the purchase agreement.
- Missing exemption paperwork. Without correct proof at recording, the county can deny the exemption.
- Underpaying at recording. If a shortfall is discovered, the county or state can assess additional tax, penalties, and interest later.
Plan your Lowry Hill closing with confidence
When you know what each tax and fee covers, who typically pays, and how to verify the math, you can negotiate from a position of strength. If you want a precise, property-specific breakdown for your Lowry Hill sale or purchase, we are here to help you model the numbers and align your contract terms to your goals.
Ready for clarity and a seamless close? Let’s connect. Reach out to The City Dwellings Group to request a confidential consultation and get a custom closing-cost outline tailored to your property, financing, and timing.
FAQs
Who pays deed and mortgage taxes in Hennepin County?
- Customarily, the seller pays the deed tax and the buyer pays the mortgage registry tax, but your purchase agreement can change the allocation and lenders may require the borrower to pay mortgage-related charges.
Are exemptions available for Minnesota deed or mortgage taxes?
- Yes, but eligibility is specific; government entities, certain non-profits, intra-family transfers, divorce-related transfers, and some trust transfers may qualify, and you must provide required documentation at recording.
Does Hennepin County’s ERF apply to every recording?
- Not every instrument; it applies to qualifying recorded deeds and mortgages in Hennepin County under the county’s current schedule.
Can taxes be reassessed after closing if the amount was short?
- Yes; underpayment can trigger additional tax, penalties, and interest, so accurate reporting and exemption documentation at recording are important.
Where can I verify the current rates and increments?
- Check the Hennepin County Recorder for ERF and recording fees and the Minnesota Department of Revenue for deed and mortgage registry tax rates and rules.
