Florida Commercial Law

How to Safely Advertise Owner Financing when Selling a Home

Did You Know that there are Federal Regulations that You Must Follow when Advertising Owner Financing for Homes?

By Zana Holley Dupee, Esq.

Bogin, Munns & Munns, P.A.

(352) 332-7688

The Regulation that needs to be followed re advertising seller financed homes is known as Regulation Z, which was issued by the Board of Governors of the Federal Reserve System to implement the federal Truth in Lending Act, which is contained in title I of the Consumer Credit Protection Act, as amended (15 U.S.C. 1601 et seq.).

Regulation Z applies to individuals offering mortgage financing as well as banking institutions. 

Regulation Z provides for the strict regulation of real estate ads that include mortgage financing terms.  General phrases, such as "Liberal Terms Available" may be used, but if details are given they must comply with this act. By the provisions of the act, the annual percentage rate (APR), which includes all charges rather than the interest alone, must be stated.

If any one of the following Triggering Terms is used, then 3 further items of information must be included.  The Triggering Terms are

• amount or percentage of down payment (unless none is required);
• number of payments or period of repayment;
• amount of any payment; and
• amount of finance charge.

If any of the above terms is mentioned in the ad, then the ad must also include

• amount or percentage of down payment,
• number of payments or term of loan, and
• the words "annual percentage rate," so identified, and whether that rate is to be increased after consummation.

For example, full disclosure would be required if any of the following phrases were used:

• 30-year loan available
• Payment $835.26 including principal and interest
• Only 5 percent down

You can use the following phrases without triggering the disclosure requirements of Regulation Z:

"Financing Available"

"Terms Negotiable"

"Owner may finance"

"Assume 9 percent annual percentage rate loan"

"Attractive Financing"

"$90,000 Mortgage Available"

And any offer of financing must include the words "to a qualified buyer."

Willful violation of this regulation is a CRIMINAL misdemeanor punishable by up to $5,000 fine and/or 1 year in prison.  Plus, you can be sued by a consumer for deceptive and unfair trade practices and be liable for $1,000 penalty, court costs, attorneys' fees, and any actual damages.  Plus, the regulatory agency can impose a civil fine of up to $10,000 for deceptive and unfair trade practices.

Zana H. Dupee, Esq. Attorney, Bogin, Munns & Munns, P.A. http://www.linkedin.com/in/zanadupee	100 SW 75th St., Suite 206 Gainesville, FL 32607 work: (352) 332-7688 mobile: (352) 262-7121 fax: (352) 332-7692

When Rental Property is Managed by A Real Estate Broker, Must the Broker Hold the Security Deposit?

When a Real Estate Broker Manages Rental Property, Must the Security Deposit be Held in his Escrow Account?

by Zana Holley Dupee, Esq.
Florida Commercial Attorney
Bogin, Munns & Munns, P.A.
(352) 332-7688

Real Estate Brokers often provide property management services for owners of investment properties.  When a broker provides property management services to a landlord, must the broker hold the security deposit or advanced rents in escrow?

Contrary to the belief of some realty companies, the answer is No.  Florida Statutes Section 83.49(1)(a) and (b) provide

83.49  Deposit money or advance rent; duty of landlord and tenant.--

(1)  Whenever money is deposited or advanced by a tenant on a rental agreement as security for performance of the rental agreement or as advance rent for other than the next immediate rental period, the landlord or the landlord's agent shall either:

(a)  Hold the total amount of such money in a separate non-interest-bearing account in a Florida banking institution for the benefit of the tenant or tenants. The landlord shall not commingle such moneys with any other funds of the landlord or hypothecate, pledge, or in any other way make use of such moneys until such moneys are actually due the landlord;

(b)  Hold the total amount of such money in a separate interest-bearing account in a Florida banking institution for the benefit of the tenant or tenants, in which case the tenant shall receive and collect interest in an amount of at least 75 percent of the annualized average interest rate payable on such account or interest at the rate of 5 percent per year, simple interest, whichever the landlord elects. The landlord shall not commingle such moneys with any other funds of the landlord or hypothecate, pledge, or in any other way make use of such moneys until such moneys are actually due the landlord;

Thus, the property owner (landlord) has the responsibility to hold the security deposit and advanced rents in a non-interest-bearing or interest-bearing account in a Florida banking institution.

The real estate broker does not need to hold this money unless the broker and landlord agree that the broker will do so pursuant to a property management agreement.  Further, the escrow agent, holder of the security deposit should be designated in the lease between the landlord and tenant.

If you need a consultation regarding Florida Landlord/Tenant Law or the duties of a Real Estate Broker, then call Zana Holley Dupee, Esq. of Bogin, Munns & Munns, P.A. at (352) 332-7688.