If you’re thinking of buying a home in South Dakota, you’ll need to consider the following rules and regulations:
Home seller and buyer laws
- Real estate property disclosure forms: South Dakota requires sellers to provide buyers a seller’s property condition disclosure statement. It asks sellers to address more than 100 points about the condition of their home, as well as potential safety hazards and legal issues, such as whether the home has any outstanding liens. Using this statement, you’ll also be able to learn more about a home’s internal workings, such as its plumbing, electrical and sewage systems.
- South Dakota is both a judicial and non-judicial foreclosure state: Lenders often choose to foreclose on a property if a homeowner fails to pay their mortgage. In certain states, lenders can foreclose on a property without going through the court system, while other states mandate that foreclosures receive judicial attention. Some states, like South Dakota, allow for both judicial and non-judicial foreclosures, both of which usually follow a 90-day timeline.
- Equitable distribution: South Dakota is an equitable distribution state. This means that when a couple divorces, the state requires that assets (including property) and debts be divided fairly. This is different from the 50/50 split required in community property states. In South Dakota, if a divorcing couple can’t decide on how property will be divided, a court will step in after looking at factors such as individual incomes and future earning power.
- Escrow state: Like some states, South Dakota does not require buyers to use a lawyer to close on the purchase of a home. These states are referred to as escrow states, which means homebuyers can work with escrow officers or title company representatives to close instead.
Like many states, South Dakota imposes a real estate transfer tax at the time of closing on a home. This fee is determined by the total value of the home; buyers should know that lenders are responsible for telling you the amount once you’ve identified a property. South Dakota has a 0.1% transfer fee rate, which means buyers pay $0.50 for every $500 in home value, or $200 for a home worth $200,000.
According to Tax-Rates.org, the average property tax rate in South Dakota is now 1.28% of a property’s value, which means residents pay a median of $1,620 per year. Keep in mind that property tax rates usually vary by county. For example, in Minnehaha County, where Sioux Falls is located, the average tax rate is 1.42%, or $2,062 per year. By Tax-Rates.org’s numbers, that amount is one of the highest in the U.S.
South Dakota does offer a number of programs that can help seniors or those who are disabled shave their property tax bills. Depending on how you qualify, the help comes in the form of tax refunds, reductions, exemptions or an assessment freeze on the value of your home to prevent it from going up.
Conforming loan limits
South Dakota now has a maximum conforming loan limit of $484,350 for a one-unit, single-family home, a rate that is the same for most of the U.S.
Conforming loans are home mortgages that abide by guidelines and limits set forth by Fannie Mae and Freddie Mac. These two government-sponsored enterprises set conforming loan limits, which vary by state and county, each year. Conforming loans are important: By sticking to the borrowing limits of this type of mortgage, consumers who have good credit generally get their best interest rates.