An experienced commercial real estate attorney in New York State will recommend to their clients purchasing commercial property to explore the option of having the seller’s existing mortgage assigned to the purchaser instead of the purchaser simply paying it off at closing.
In New York State, there is a mortgage recording tax. This tax is a percentage of the amount of the mortgage. The percentage varies based on the county in which the mortgage is issued. If a mortgage is assigned to the purchaser instead of being paid off and a satisfaction of mortgage being recorded, then the amount of the existing mortgage is “credited” against the amount of the new mortgage for the purposes of determining the mortgage recording tax.
For commercial loans, the costs incurred to assign the mortgage is usually less than the amount saved in connection with the mortgage recording tax, thereby making it a valuable opportunity for the purchaser to save some costs in connection with acquiring the commercial property.