Real Estate Law FAQs for Buyers
In the vast market of homes for sale in Florida, how do you find your home sweet home?
So, you're ready to buy a new house and have begun to look at Florida homes. You've seen some beautiful properties, but just thinking about all the steps between seeking and finding might make you anxious, if not down-right terrified. That's a normal response. In fact, anyone who tells you he or she cruised through the process fearlessly is probably either trying to impress you or is suffering from a bad case of denial!
It's okay to take it personally.
As you've seen, no two homes for sale in Florida are identical, and neither are any two buyers. So it stands to reason that no real estate transaction is going to be a generic, cookie-cutter deal. The truth is a lot of things have the potential to go wrong. And considering what's at stake—your money, your home, your peace of mind—consulting a real estate attorney who is familiar with the legal intricacies of homes for sale in Florida is one of the smartest things you can do for yourself and your family.
Trust your spouse, your dog, your lawyer.
Your real estate lawyer is the only person who represents your interests and your interests only in the home-buying process. You are his or her main agenda. Primarily, your attorney's job is to:
- Help you fully understand exactly what you're committing yourself to when you look at homes for sale in Florida
- Make sure that when the transaction is over, you get what you think you're agreeing to
- Ensure that you are buying a house from the right person—one who doesn't have "baggage" that could harm you down the road
Let your real estate attorney protect your interests.
As the only member of your home-buying team who is qualified to give you legal advice, your attorney lawyer is worth his or her weight in gold during key points of the process. If you have the presence of mind to hire us before you sign a purchase contract, you¹ll do yourself the favor of making sure that your home-buying experience goes as smoothly as possible and that potential problems are solved before closing. And, as long as we issue your title insurance, you won't pay more by involving us early on.
Details, details.
Your lawyer can answer a lot of nitty-gritty questions, including some very important ones that you may or may not know to ask:
• What are my income tax and estate tax consequences?
• What do I need to know about Florida property taxes, zoning or special assessments?
• How will I handle probate issues?
• How can I simplify a future sale?
• Is the property's recorded legal description accurate?
• Will I be able to use the property as I wish?
• Will the title to the property be marketable if I decide to sell or refinance later?
Getting it done.
Having a lawyer on your side can help make sure your interests are faithfully upheld. And the earlier in the process you involve us (e.g., pre-contract signing), the more value you gain. One of the greatest benefits of using a real estate attorney is that we have an ethical obligation to work on behalf of your best interest.
Plus, a lawyer who is versed in Florida real estate law and will either personally perform or make sure the following procedures are completed in a timely, professional manner:
• Review the contract and ensure that all provisions and contingencies are in your best interest
• Inform you of your legal rights and obligations
• Obtain a title search, evaluate the status of the title and require appropriate legal remedies to clear any defects
• Advise you on what the title policy does not protect against, emphasizing marketability of the title when you sell
• Prepare or review the closing statement and other closing documents, and let you know about seller contingencies that affect your interests
• Interpret and counsel you about all legal documents related to the title and transaction, including deeds, mortgages and closing statements
• Advise you on how you should take the title to the home, and how this affects your overall business and personal estate
• Check for unrecorded municipal liens, including sewer and special assessment liens
• Prepare a bill of sale to cover any personal property such as curtains and appliances that you and the seller agree shall remain in the home
• Inform you about the income, estate, and gift tax consequences to your estate
The fees (and value) of a real estate attorney
You can hire either a non-lawyer title agency or a real estate attorney to handle your title insurance. You might think a lawyer would cost more, but actually they both cost about the same. The benefit to letting an attorney handle the title insurance is that he or she can also:
• Prepare the purchase contract
• Resolve any title or inspection issues
• Give you legal advice throughout the transaction
A title agency that isn't affiliated with a real estate lawyer cannot do any of those things.
Whether or not separate attorney fees will be charged depends on the way the transaction is structured. Typically, if the lawyer acts as the closing agent and provides your title insurance, there will be no other fees involved. For more complex circumstances, fees could range from $350 to $750 for an average-priced home. If you hire a lawyer to review the title commitment and other documents prepared by someone else, a moderate and reasonable fee will be charged, with the actual cost varying across the state.
An overview of Florida real estate contracts.
This is where things get exciting. When you find the house you want to call home, you'll make an offer by submitting what's called a "contract for purchase and sale" or "purchase and sale agreement." It¹s the blueprint for the entire transaction. Real estate agents often provide these, but unless you understand the nuances of real estate law, don't sign without having your attorney review it.
Your attorney is familiar with Florida real estate contracts and Florida real estate law. He or she will make sure all the provisions are to your benefit, and will add or delete some if they're not. Remember, once the contract is signed, you're legally bound to the terms. If you can't wait for your attorney to review the contract, then only sign with the condition—written clearly above your signature—that the deal is "subject to my attorney's approval."
The contract spells out the terms and conditions of the purchase-from the purchase price all the way down to who pays the utilities until you take possession of the house. However, don't think any pre-printed Florida real estate contract is written in stone. Rather, it's where you and the seller begin negotiating. And it's where your lawyer will be invaluable to you-offering advice that can save you hundreds, even thousands, of dollars down the road.
Although you may be told that the contract you're about to sign is "standard and customary," remember that nothing is standard in real estate law! No two situations are alike. There are exceptions to everything and many subtle local and regional nuances. And even though you might be told you don't need an attorney, if you want your interests and finances protected, you do.
That's why it's so important to ask your lawyer to review the contract before you sign it. Think of the contract as the blueprint for the entire transaction—most everything is determined at this time. No, the contract itself can't hurt you. It's just a pile of paper and ink. That is, until you've signed on the dotted line. After all, we're talking about a legally binding document, so it's in your best interest to make sure the complex details of the contract aren't left out or written in a way that puts you at a disadvantage.
The best way to protect yourself when submitting a contract is to enlist the help of your attorney. He or she can examine the document for you, spelling out in proper legalese the exact terms under which you will buy the home and making sure those terms are legally enforceable. If there's a dispute with the seller and your contract isn't drafted properly, your hard-earned deposit could be at risk and you could be forced to accept a resolution you don't like.
Here's what your purchase contract should include:
• Purchase price—it may not be your final offer, but it should be realistic given the recent selling prices of homes comparable in terms of age, size, condition and location.
• Full names of buyers and sellers, plus their marital status
• Address and proper legal description of the property—uses real estate lingo such as "plats" and "tracts" to pinpoint the property's exact location
• Earnest money deposit—a.k.a. "good faith" money, usually 3% to 5% of the purchase price; placed into an escrow account after the home inspection contingencies have been met; do not give the money to the seller!
• Closing costs and who pays them
• Amount of commission paid to real estate agent(s)
• Bill of sale that describes and itemizes any exchange of personal property, such as window treatments or appliances
• Date and place of closing
• Date the seller will vacate the home
• Responsibility for payment of utilities until you take possession
• Any contingencies (conditions)—see below
Contingencies: the nitty, the gritty, the necessary.
You can lose a lot of money over the "minor details" if they're not clearly written into the contract as contingencies, or conditions under which you will buy the home. A lawyer can guide you through all the elements of the contract, pointing out any contingencies or conditions that aren't favorable to you.
Who pays for what—the home inspection, repairs, closing costs, etc.—is determined by regional or local customs. But there's no law that dictates one party must pay for certain procedures. By the way, oral agreements are generally not enforceable in Florida. So if the sellers told you they'd leave behind the porch swing, be sure it's specified in the contract.
No "standard" contract will automatically include every provision specific to your needs and requirements—they must be added. In addition to making sure you're protected, a lawyer can spell out all your legal rights and monetary obligations, and insert any contingencies (or "escape" clauses) within the contract, including:
• Financing contingency. This makes the deal dependent upon your receiving the mortgage you're applying for, specifying cancellation rights and return of earnest money deposit if you can't arrange adequate or acceptable financing
• Home inspection. If you are not satisfied with the home's inspection report, this clause covers your right to force the seller to make repairs and/or lower the price of the home—or you can opt out of the contract.
• Home sale contingency. Allows a specific timeframe for you to sell your current home.
• Clear title. The seller has to give you a clear and marketable title to the property.
• Return of earnest money. Should the transaction collapse through no fault of your own—i.e., you don't get the loan or the seller can't or won't meet one of your contingencies—this clause says you get your deposit money back.
• Liability for fire or other hazards. If something happens to the house after the contract has been signed but before you actually move in, this clause protects you from liability.
Let the negotiating begin.
As we've said before, it would be nice if the sellers accepted your offer just as you propose it. But more than likely they will counter-offer, making adjustments to the price or dates or contingencies.
The art of give and take.
Since negotiation is not part of our everyday purchasing habits, it's perfectly normal to feel uncomfortable with the whole idea. But when you're buying a home, the only way to get out of negotiating is to accept the sellers' asking price, which might mean paying more than the home's fair market value. To avoid that sinking feeling that you paid too much, keep reading this page to find out about:
An example of how it might go.
Say you make an offer on a home with an asking price of $312,000. Your real estate agent tells you that comparable homes in the area sold in the last six months for $300,000 to $310,000. So you make an offer of $300,000. Your real estate attorney or your agent prepares a contract, writing in the appropriate contingencies, including the condition that all appliances and light fixtures remain in the home. Your real estate agent then formally presents the offer to the sellers. In a couple of days, you receive a counter-offer of $310,000 with the seller's contingency that you submit a pre-approval letter from your lender. After a couple of more rounds, the seller finally agrees to come down to $305,000 if you move the closing day from four weeks to six weeks to allow their kids to finish school. You need to close in four weeks, but you offer to let the sellers rent the house from you for two weeks after closing. The sellers accept. A deal is struck!
Those interfering feelings.
The example above neglected to mention the emotions that might come up along the way. We're talking about your dream home and all your hard-earned savings, so of course feelings are likely to play a strong role in the process. You can't control their existence, but you can control where and when you express them. Even though it may feel personal when the sellers insist on a pre-approval letter from your lender, getting angry or indignant in front of the people involved in the transaction can do more harm than good. Besides, look at it from the seller's perspective: They are taking their home off the market to work with you; they want to sell to someone who is financially capable of buying their home, or else the ping-pong game of negotiating is a waste of their time.
A few negotiating tips.
• Whoever made the most recent offer is legally bound to that offer until it's either withdrawn by that party or the other party answers.
• Get all counter-offers and contingencies to the purchase offer in writing, initialed by both parties. A lawyer can prove especially helpful here, making sure all amendments are legal and clear to both sides.
• EVERYTHING IS NEGOTIABLE! From the price to the closing date to the sconces on the living room walls.
• The bigger the gap between the asking price and the offering price, the more time you should allow to reach a mutually satisfactory price.
• Be aware of how long the home has been on the market. If it's been a while, say a few months, you might have a slight edge when negotiating.
• A home inspection typically isn't done until after a purchase offer is made, so be prepared to enter the negotiating phase without a crystal clear picture of what you're getting. Once you learn what the home's physical problems are, you can go from there, asking the seller to make the repairs or lower the price, or you may choose to walk away if you think the problems are too extensive—that is, IF your attorney has included a contingency spelling this out! If the contract says you must buy the home at a particular price "as is" or with narrow limitations, you don't have much bargaining power.
• If you're not the only buyer bidding on a home, remember that the seller is looking for the best offer in terms of price, terms (who's paying for closing, repairs, etc.), and contingencies. Too many conditions and the seller may very well turn up their nose and go with less-demanding buyer.
• Pick your battles. Know ahead of time what's really non-negotiable to you, then be willing to compromise on the lesser issues.
• Keep your feelings out of your finances. If you can only afford to pay $169,000 for a home, don't go far above that number in a panic that you might lose this house. Be willing to walk away, trusting that there are more fish in the sea.
• Keep your eye on the ball. The goal is to get your dream house for a fair price, not to send the seller down in flames by getting everything your way.
Otherwise known as "signing your life away."
Big commitments can feel overwhelming. But once you have a good understanding of the process and a real estate attorney working for you, you'll feel a lot more comfortable. In fact, it's at closing—when you're ready to sign and finally acquire your own piece of real estate in Florida—that you'll appreciate your real estate attorney the most. Especially if your attorney reviewed and revised the contract before you signed it.
Since the contract you sign defines what happens at closing, your lawyer is very limited in how much they can help if you simply ask your attorney to "show up at closing." At that point, the game's over—all the obligations and responsibilities have already been defined and agreed to in the contract. That's why it's so important to involve your lawyer early on. Remember, a real estate lawyer can make the difference between a smooth closing and one that falls apart in the eleventh hour.
Problem prevention.
If it all seems overwhelming, fear not. Bringing in a real estate attorney early in the home-buying process helps ensure a smooth closing day. Without an attorney involved before the contract is signed, here are some things you might face:
• Unnecessary taxes or expenses because contract terms weren't negotiated in your favor
• Title (ownership) taken in a way that is inconsistent with your needs or your future plans for the property, such as building a pool or storing a boat in your driveway
• A purchase contract that is not enforceable, complete or consistent with what you originally intended
• A discovery at post-closing that the seller borrowed money against the property hours before closing
If you need a real estate attorney to assist you with buying property, call Zana Holley Dupee at (352) 379-5900.
