Does the cost of a home warranty include sales tax?

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.

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