So what is the Purchase CEMA? CEMA stands for Consolidation, Extension and Modification Agreement. CEMA's are typically used to avoid the second payment of the New York State mortgage tax by mortgagees when refinancing a mortgage. This an be used in the sale of property and both the buyer and the seller can reap benefits.
The Seller can save ,4% in New York State Transfer tax up to the first 500,000 of assigned mortgage up to $2000.00 dollars for signing an authorization. Savings are based upon the continuing lien deduction achieved because of the assignment.
The Buyer can save 1.8% to 2.55% in New York State mortgage tax when they purchase a property. The sellers existing mortgage balance is assigned to the buyer and the buyer then only pays the mortgage tax on the difference between their new loan amount and the seller existing mortgage and can save thousands of dollars.
This is a tool that will not apply to everyone. It takes time, up to a month, to obtain an assignment, the seller has to have enough of a mortgage left and all the numbers have to work. Structuring a deal with a CEMA as a component is possible but needs verification as it will not work with all sellers and buyers.
Photograph courtesy of Geekphilosopher.com
