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Weekly Q&As

Does the cost of a home warranty include sales tax?

Release Date: 06/13/2017

This email address is being protected from spambots. You need JavaScript enabled to view it., Martin & Gifford, PLLC

QUESTION: I know the law changed recently so that now there is tax due on the sale of a home warranty.  My question is, if an Offer to Purchase and Contract provides that the seller will pay for a home warranty at an agreed-upon cost, does the amount in the blank include the sales tax or would the seller have to pay the tax on top of that amount?

ANSWER: The Contract does not clearly specify whether the agreed-upon cost of the home warranty includes the tax payable on the sale of the home warranty.  For that reason, a change has been recommended and approved to the “Home Warranty” paragraph in the Contract to make it clear that the amount inserted in the blank in the second or third menu choice includes the amount of any sales tax. We have been told that an agent may contact the home warranty provider to find out the amount of sales tax that will be payable on a particular product.  The amount of the tax should be added to the cost of the home warranty and the resulting sum inserted in the appropriate blank.

This change is one of several made to the Contract.  The changes to the Contract—as well as a number of other forms—go into effect July 1st.  A list of the forms that are changing and a bullet-point summary of the changes is now available on the homepage of the NC REALTORS® website.  You may also link to a marked-up copy of an affected form to see the exact changes that have been made.

 

NC REALTORS® provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice.

© Copyright  2017. North Carolina Association of REALTORS®, Inc. This article is intended solely for the benefit of NC REALTORS® members, who may reproduce and distribute it to other NC REALTORS® members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.