Q: Is a seller in breach of contract if he did not disclose that he is a foreign seller?
Purchasing home, closing on June 1st, was informed by the closing agent on Friday the 25th (a holiday weekend) that they need my social security number for FIRPTA. This was the first I heard that the seller was a foreign.
A:
Your contract probably has a FIRPTA provision in its standard text. Read it. And be sure that the closing agent complies with the FIRPTA withholding and submission of the withholding amount to the IRS. The issue here is that YOU as the buyer are the responsible party to get the FIRPTA withheld and submitted to the IRS with the appropriate IRS forms - and the penalties for not doing it are enormous.
However the Seller is not in breach for not disclosing the need for FIRPTA - it would have come forward at closing when the seller signs the affidavit that says he/she is exempt or not exempt.
There are some exemptions for having to withhold the FIRPTA tax and it has to do with what you are going to do with the home and the price of the property. Essentially if the property is less than $300,000 AND you intend to use the property only by your family members for personal use (not rented) for the majority of the next twelve months and then for the majority of the next twelve months, the property is FIRPTA exempt and there is nothing to file. Since it is your use of the property that determines this and it is your obligation to withhold from the money you are giving to the seller, essentially you are self-qualifying the property as exempt.
This can get complicated. See a professional if you are uncomfortable in this process.
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