Inherited Property and Partition: When Your Brother or Sister or Other Heir Won’t Agree to the Sale

Posted By on May 19, 2015

In Florida, when a parent passes away owning real estate and they are the only owner or the only surviving owner, the property, whether it is the family home or the family vacation property, becomes part of the deceased parent’s probate estate.  In most circumstances, this means that the property can only be transferred to the beneficiaries named in the decedent’s Last Will and Testament after a probate is formally opened. (If the decedent dies without a will, then the real estate is transferred in accordance with Florida’s intestacy statutes, which also normally requires a probate administration.)

Once an estate is opened, the decedent’s real property moves through the probate process under the guidance of the  personal representative(s). Once the estate is ready to distribute the estate assets to the beneficiaries, Florida probate and real estate law require legal documents to be prepared and recorded in the public records in order to reflect a change in ownership and to clear any title issues, including tax related matters. Often times, this happens by preparing a new Deed, which will name, as grantees, the parties named in the will as beneficiaries of the real estate. Once all of the the documentation has been recorded, the beneficiaries (i.e. the decedent’s children) then become the recognized owners of the property according to our real estate records.

Florida condos at sunset in Hallandale Beach

Brothers and Sisters Sharing Ownership of Inheritance

Often, this means that brothers and sisters end up sharing ownership in Florida real estate. Siblings become co-owners of real estate. Legally, they inherit the property as “tenants-in-common” or joint owners of the home (or condo, or land) with their interests being undivided. Each has equal rights to the property, but there’s no line or boundary that separates who owns what portion of the property.

Brothers and Sisters Inheriting Florida Real Estate: Co-Ownership

When things go smoothly, the siblings agree on what to do with the property. For instance, everyone agrees to sell the condo in Fort Lauderdale, the second home in Miami Beach, the retirement home in the over-50 community. The brothers and sisters get together, work with a Florida real estate agent and sell the property, splitting the net proceeds.

Or, maybe they all agree to keep the property as an investment. Working together, they rent the place and have a Florida property manager handling the day to day responsibilities of being a landlord.

That’s when everyone agrees. All too often, things don’t go smoothly in these situations and family conflicts pop up over what to do with the inherited real estate.

Disputes Between Brothers and Sisters Over Inherited Real Estate

Shared ownership can lead to disagreements over what to do with the inherited property. Usually, the conflict arises over one or more siblings who want to sell the real estate and another who either does not want to sell it, or does not agree on the terms of the sale.

Common questions in these brother – sister disputes include:

  • How do I sell the house after probate if my brother (or sister) won’t agree to it or cooperate with the sale?
  • What can I do if I’m trying to sell the property we inherited in Florida and my brother (or sister) will not agree on a sales price?
  • How can I protect myself when my sibling is making me a low ball offer to try and buy me out of my inherited share of our parent’s home?

How Does a Brother or Sister Deal With Inherited Real Estate and a Stubborn Sibling?

The answer in these sibling conflicts over what to do with the inherited property is a partition action. This is a formal action filed as an adversary proceeding in the probate court where their parent’s Last Will and Testament has been filed.  It is filed under Section 733.814 of the Florida Probate Code by either the sibling or the estate’s personal representative and it is a formal request, asking the probate court to partition the property.

If the estate has been closed, then the probate court request is not an option.

In these situations, the brother or sister who is in need of help must hire their own Florida lawyer to file the request for a partition under the Florida Civil Practice and Procedure Code.  Chapter 64 of Florida Statutes explains how all partition actions are to be filed in Florida.

Partition actions are lawsuits that can be filed by any of the owners of the land: i.e., “one or more of several joint tenants, tenants in common, or coparceners, against their cotenants, coparceners, or others interested in the lands to be divided.” Florida Statute 64.031.

What Happens When Siblings Sue For Partition Of Inherited Real Estate?

The partition request is a formal lawsuit, and it means that there must be formal notice just like any other lawsuit and that the procedures for the partition action will follow along with standard Florida procedure (the Florida Rules of Civil Procedure). There will be fact-finding and court hearings, and ultimately a judgment (or settlement) over the partition request.

That judgment will be filed in the real estate records to document that legal title of the property has changed and partitioned into separate ownership by order of the court. See, Model Land Co. V. Crawford, 155 Fla. 323, 20 So.2d 122 (1944).

Money Spent By Sibling On Mortgage Payments, Taxes, Insurance: What If One Sibling Paid Everything?

When there is a request to partition the inherited property between two siblings, the brother or sister who paid mortgage payments, taxes, and insurance as well as any other money spent on upkeep and repair of the home, would get credit for one-half the amount of payments they made that are ruled to be “reasonable” by the court. See, Potter v. Garrett, 52 So.2d 115 (Fla. 1951).

Resolution of Sibling Inheritance Disputes Over Real Estate

Suing your sister or brother over an inheritance dispute is a serious matter and something that should never be undertaken without lots of consideration of your options and investigation of all your options under Florida law.

Having an experienced Florida lawyer at your side to help negotiate on your behalf both before the filing of a partition action as well afterwards can be invaluable to you — both for resolving the inheritance dispute as well as dealing with the emotions and stress that comes with these kinds of controversies.

For more on Florida partitions, see our resources page.

 

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Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

Selling the House After a Florida Divorce: When Partition is the Answer

Posted By on May 12, 2015

You live in Florida and you just got divorced. The two of you bought a house while you were married, which is usually the most valuable marital asset. The judge finalized your divorce, but ownership and how the home is to be disposed of wasn’t mentioned or adequately addressed in the settlement agreement or in the final judgment and now you have a problem.  What do you do?

What do you do when an ex-wife or ex-husband won’t agree to buy you out or won’t answer your calls or texts about signing over the deed?

What do you do, if you need the home sold for any number of reasons: maybe just to get the divorce completely behind you; maybe because you cannot afford to live in the house and your credit and FICO scores are dropping.; or perhaps you need to get the equity out of the property.

Your answer may be a partition action.

What is a Partition?

Under Florida law, any owner of real estate can file a lawsuit requesting a judge to end the joint ownership of the property. Partition lawsuits are filed in all sorts of situations; however, no matter what the facts are, when two or more parties share ownership of real estate (commercial or residential) here in Florida, one of those owners has the legal right to request the property to be sold. (Thus, for those who have been divorced and still share joint ownership of the home they lived in while married, a Florida partition action may be a godsend.)

After a divorce, you and your ex-spouse are considered to be “tenants in common” — meaning, you are separate but  undivided owners of the real estate — and under Florida law, the only way to forcibly sell the property is by filing a “partition” lawsuit. Florida Statute 64.011 et seq.

In a Florida partition action, the judge orders a fair and equitable distribution of the real estate, thereby ending the shared ownership of the property – and also orders a distribution of the proceeds from the sale of the home based upon factors, including the costs and expenses that one owner has incurred versus the other owner. Meaning, for example, if one owner has expended more than the other for the upkeep of the property, then the owner laying out the money will receive a larger portion of the proceeds from the sale of the home.  (Also, if one owner has been living in the home, the non-residing owner can argue that they didn’t receive their share of the rental value of the property — these are 2 arguments that are normally made by the parties to a partition action and they are settled by the Judge at the time of the resolution of the case.)

Is a Partition Action a Separate Lawsuit?; Where is the Case Filed?

The request to partition the marital home after divorce is a circuit civil lawsuit. It’s not a part of the family law divorce case; since it pertains to land, the partition action must be filed in the county where the contested real estate is located. See, Rankin v. Rankin, 258 So.2nd 489 (Fla. 2d DCA 1972); Florida Statute 64.022.

If the home is in a different county than where the divorce was filed, then the partition action must be filed in the county where the house sits.

How does Remarriage or Death Impact The Marital Home After Divorce?

There are certain special situations where a divorced has occurred, there has been a change in circumstances between the ex-spouses, and the only way to resolve a dispute over the marital home is to file a partition action. These special situations include:

1. Remarriage

In some divorce cases, one spouse may be allowed to live in the home as part of their ex-spouse’s support obligation. That right to live in the home does have limits, however, and for example, the ex-spouse can sue for partition of the home if the supported ex-spouse (the one living in the marital home) remarries. The courts have reasoned that the remarriage changes that need for support and now the home should be free to be partitioned and sold. Anderson v. Anderson, 424 So. 2d 943 (Fla. 5th DCA 1983).

2. Death

If an ex-husband passes away, courts have held that his ex-wife’s right to exclusively occupy the residence terminates as an operation of law. The two ex-spouses are no longer tenants in common because one of the tenants has died. The home is now subject to partition. Huff v. Huff, 453 So. 2d 531 (Fla. 5th DCA 1984).

Real Estate Attorney and a Partition Lawsuit

My advice for those who have been through a divorce and want to unburden themselves from the real estate obligations they entered into while married, specifically the family home and mortgage, is to seek the advice and help of a Florida real estate lawyer with experience not only in real estate matters but divorce related issues as well. Cases involving the sale of a former marital residence can be difficult to resolve (including knowing how to correctly allocate expenses and lost revenue between the parties) and an aggressive yet compassionate approach can be vital in fairly resolving these disputes.

For more about Florida partition actions, read some of our earlier posts including:

 

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Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

Escrow/Deposit Problems in Florida Residential Real Estate Closings

Posted By on May 5, 2015

When you are buying a home here in South Florida, or you are trying to sell a house or condo somewhere in the Miami – Palm Beach – Fort Lauderdale area, there are certain things that are automatic in every residential transaction. The buyer makes an offer and the seller either counters or accepts. A purchase agreement gets signed. A deposit is put down, a mortgage is sought.

An Escrow account, is part of every Florida residential real estate transaction. And like most things, escrow deposits goes smoothly … until they don’t. And when there are problems with a Florida escrow account, it often takes a Florida real estate lawyer to help fix things and either get the deal closed or help the buyer (or seller) walk away from a bad bargain without getting harmed in the process.

What is an Escrow Account?

An escrow account is a bridge of sorts between the buyer and seller whenever a Florida home or condo is being sold. It is an account where the money that is being transferred from buyer to seller is held. The “escrow agent” oversees the account, and is responsible not only for the money itself but also the documentation that relates to the money.

Funding Escrow in a Residential Real Estate Transaction: Earnest Money

When someone is purchasing a Florida home or condo, they begin by providing a sum of money that is defined in the purchase agreement as the “earnest money.” The earnest money is given by the buyer as evidence that the buyer is serious about buying the real estate; earnest money allows the seller to remove that property from the open marketplace (and from the possibility of other buyers making offers) because the buyer is serious about purchasing the house.

The buyer doesn’t hand over the earnest money to the seller. The buyer hands over the earnest money to the escrow agent who puts it into an escrow account.

Usually, buyers will put up to 10% of the asking price of the home as a deposit towards the purchase. It’s this earnest money – a sum that demonstrates to the seller that the buyer is “earnest” or in good faith about wanting to buy the property – that goes into the hands and control of the escrow agent until the closing is completed and ownership of the real estate transfers from the seller to the buyer.

Other Things That Go Into the Escrow Account

The buyer’s earnest money isn’t the only thing that can gets deposited into the escrow account. Other things that may be held in escrow include things like:

  • The buyer’s additional deposits;
  • Closing costs to be paid by the buyer;
  • Closing costs to be paid by the seller;

Can The Buyer Get Back Their Escrow Money?

Once the escrow account has the earnest money deposit, it stays there until closing. The buyer just can’t say “oops” and get it back. However, there are times when the escrow agent must return the earnest money to the buyer; these instances include:

1. An Inspection reveals problems with the property and a contingency clause in the purchase contract allows the buyer to get their deposit back and walk away; or

2. The Appraisal comes back lower than the purchase price and again, there is a clause in the purchase agreement that allows the buyer a refund of their earnest money and the choice to walk away (if they don’t want to renegotiate for a lower price).

Problems With Escrow Caused By Real Estate Agents and Brokers

Often, real estate professionals (agents, brokers) act as escrow agents in Florida residential real estate sales. One of the most common problems with escrow accounts in Florida is a discrepancy that occurs between the money entrusted to the real estate agent and the money that actually goes into their real estate broker’s account. More common problems caused by real estate agents or brokers holding deposits, include situations where:

1. The agent doesn’t make sure that the buyer’s money is actually in the escrow account, then the deal goes south (i.e. the buyer has breached the contract), the seller not only losses the sale of the home or condo, but also losses the earnest money deposit that was supposed to help make the seller whole in this very situation. Here, the seller may have not only a breach of contract claim against the buyer but also a complaint about the broker with the licensing board  (as well as a legal claim against the broker).

2. Even if the real estate agent and the real estate broker are careful to get the buyer’s deposit check, if the escrow account cannot be fully reconciled down to the penny, then there’s a problem. Escrow accounts should start with the sum of zero, before anything is deposited in it, and it should end with zero, after all the money has been distributed at the closing table. (Real estate brokers in Florida are required by law to check on escrow accounts every month to make sure that everything is okay. See, Florida Administrative Code rule 61J2-14.012.) If the money in the account doesn’t balance at the closing table, then there may be a claim against the escrow agent / real estate broker.

3. Lots of real estate lawyers receive calls about this scenario — The escrow agent willfully breaches the contract or is grossly negligent for mis-delivering the deposit to the buyer or the seller when there is a dispute i.e. there are conflicting demands for the deposit because the transaction has or is falling apart.

Are You Having a Problem with a Deposit Being Held By a Real Estate Broker or Other Escrow Agent?

If you are in the process of buying a home or condo here in South Florida, or if you are a seller who is concerned that the sale of your residential real estate is about to fall apart, then getting the help and guidance of a Florida real estate lawyer can be invaluable to you. Florida attorneys with experience in residential closings may not only be able to get the deal completed, but they may be able to resolve disputes quickly and without stressful time and money on your part.

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Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

Florida Residential Closings and Price Changes: Is The Buyer’s Offer Set in Stone?

Posted By on April 28, 2015

Buying a house or a condo here in South Florida may be the biggest purchase that someone makes in their lifetime, or one of the biggest. Buyers surf the web looking for the perfect home, as well as visiting potential properties with their real estate agent. Once a buyer has found the house or condo that they can envision living in with their families, that’s when things start getting interesting.

Once the buyer decides on a specific property, there is still the matter of making an offer on the house or condo, and waiting to see if the seller accepts their offer or makes a counter offer. Even sellers anxious to sell and buyers excited to buy can go a round or two in negotiations before there is a firm offer and an acceptance in place.  Once the contract is signed and the earnest money deposit(s) is paid to the escrow agent, that’s when when the closing process begins.

Can a Buyer’s Offer Change After the Seller Accepts It?

Once that offer has been accepted by the seller, then the negotiations are pretty much completed, right? Not necessarily.

There are situations where offers to buy a residential property in Florida can be changed before the transaction closes. Real estate lawyers are often invaluable to both the buyer and the seller when these circumstances arise between the parties.

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One common example of where the buyer tries to renegotiate the price is during the inspection period.

Here in Florida, particularly South Florida where we have humid and hot weather conditions, residential properties are almost always inspected by a third party inspector for things like mold, leaky roofs, or termites, for example. (Other items routinely inspected include electrical outlets, air conditioning, pool and septic tank)

If the home inspector or the pest inspector finds a problem, like mold behind drywall or termite damage in the attic, then the buyer may decide to either cancel the contract or ask to the lower the purchase price to allow for the cost of repairing the problems the inspector has found. (An alternate strategy is for the buyer and the seller to keep the sales price intact, but have the seller credit the buyer, at closing, the cost of fixing what the inspection has revealed – additionally, some purchase and sales agreements have repair provisions that require the seller to make repairs up to a certain dollar amount.)

Contingencies in the Purchase Agreement Allow for Price Change

Most standard contracts that buyers submit to the sellers include not only the amount of money that the buyer is offering to pay the seller to buy the home or condo, but they also include conditions that the buyer and seller must meet before the deal can go close. These conditions are also known as “contingencies.

Here, the assistance of a knowledgeable Florida real estate lawyer can be very helpful, both for Florida buyers as well as Florida sellers — particularly if there are disputes during the closing process on whether or not contingencies have been met or satisfied.

(Lawyers are a must especially if the problems are discovered after closing, see “Does a Home Buyer Have a Claim Because They Weren’t Told About a Problem with Their Home?“)

Common conditions or contingencies that buyers place in a purchase agreement which can lead to a price reduction or change in the sales price include:

  • Inspection rights – where the inspection reveals major flaws or damage to the property;
  • The seller agrees to make repairs before closing, which are not completed;
  • The seller agrees to make repairs before closing, which are not completed to the satisfaction of the buyer; and
  • Undisclosed problems which are discovered during the inspection/closing process (i.e. title defects, municipal liens, Condominium Association or Homeowner’s Association liens, easements, encroachments, illegal conversions, non-permitted additions, etc.).

Can a Seller Avoid Having the Buyer Change the Price?

What if a seller wants the comfort of knowing that the purchase price they initially accepted will be the amount that they are paid at closing? To achieve this goal, the seller can, in the contract, allocate money that he or she is willing to pay for any needed repairs that are revealed during the inspection.

The seller can also decide at the outset that they will offer their home or condo “as is,” which means that the seller is not willing to the lower the price for any issues that the buyer may find during its inspection period, or otherwise; the buyer agrees to buy the home without any real bargaining power for a price reduction. However, selling a home “as is” may make it harder to sell the property, since it can be seen as a red flag to many that the property has some real flaws or defects. (Which may also keep the property on the market longer.)

What about other clauses or provisions in the purchase agreement? Most purchase and sales agreements contain time frames (i.e. 45 days from the effective date or 5 days prior to closing) that impose a deadline on the buyer to voice any complaints about the condition of property (for example, complaints about the title or the physical condition of the property) and, if the deadline is missed, then the complaint is considered waived and the buyer takes the property subject to the condition. Buyers, and their real estate agents, need to be aware of these deadlines (especially since most standardized sales contracts contain a time is of the essence provision) in order to preserve their rights to cancel or try to negotiate a reduction in the sales price.

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Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

How Important is Title in a Florida Residential Real Estate Closing?

Posted By on April 21, 2015

Closings for residential real estate (homes, condos) are often held at the offices of title companies here in South Florida (even though most real estate lawyers will close a transaction at no additional cost). One of the most important aspects of a real estate closing, is the title work, which is an often under emphasized issue at closing.  (The title company usually, at least in my experience, focuses on getting the deal closed and lets the title underwriter worry about the title work.)

In our part of the state, real estate records are kept in the Broward County, Miami-Dade County, and Palm Beach County public records. They not only cover every square inch of land in each county’s jurisdiction, these records track the ownership of land here for hundreds of years — back to the Spanish land grants of long ago.

Florida land records can be complicated with historically dense documentation, and confirming clear title in our state is more of a complex issue than in other parts of the country.

The Importance of Title at Closing

In any closing, but especially a Florida closing where someone is buying their primary residence, that buyer assumes that the seller is legally transferring full ownership of the land, and the improvements built upon the land (house, driveway, fence, sewer drains or septic systems, etc.), free and clear of any liens or encumbrances. However, those assumptions can sometimes be wrong.

If the seller is unable to convey “clear title” (the term used in most Contracts is “marketable title”) to the buyer, then the transaction should not close. The closing should not happen because the seller cannot transfer what he or she has agreed to sell to the buyer in most Florida residential real estate contracts (i.e. The Florida Realtors/Florida Bar Contract).

Title Search and the Title Report

So what happens to make sure there is “clear title” or “”marketable title” at the closing table? Before closing, a title search is performed to confirm that the seller is indeed the legal owner of the property being sold.

The title search will also reveal any claims against the property — from a lien filed by a contractor who wasn’t paid for work done on the home or condo to any mortgages and/or equity lines. Anything that interferes with clear title is called a “cloud on the title” and the seller needs to get these matters resolved before closing can take place.

In Miami-Dade and Broward Counties, title searches are performed by the closing agent (i.e. the title company or lawyer closing the transaction) who have expertise in investigating real estate records and claims against property. The reports are usually prepared by title underwriting companies who will issue a title report that summarizes the title company’s findings.

Once the buyer has the title report, then the seller needs to resolve any problems identified in the title report. If the title cannot be cleared for the closing, then the sale may fall through — if not because of the buyer walking away, then because the lender will not go forward with the home loan without a clear and clean title on the property.

Title Insurance Policies

In Florida, title insurance is an important component of our real estate industry.   It facilitates the timely transfer of property between buyer and seller and allows for mortgage lenders to confidently lend money to property owners.

An “owner’s title insurance policy” is an insurance policy that provides coverage for the owners of real estate in the event there is a defect in title, a valid lien against the land, or other legal claims against the real estate that result in a loss in interest held in the property (mortgage lenders receive a “mortgagee title insurance policy”). If there is a successful challenge to the policy holder’s title, then the coverage will pay for the damages that result (up to the policy amount).

Title insurance is a part of almost every residential real estate closing here. Lenders mandate that title insurance policies (with the lender as the named policyholder) are in place before they’ll fund a home loan, for example. Nearly every cash buyer will often ask for an owner’s title policies, too.

It’s a big business, and the Florida Department of Insurance oversees the title insurance industry in the State of Florida. There are laws and administrative rules in place regarding how title insurance policies are to be sold and what they may and may not provide in their coverage. There are also regulations regarding what these title insurance companies can charge for this real estate title protection.

Should Florida Lawyers Conduct Real Estate Closings and Issue Title Insurance?

Experienced Florida real estate lawyers representing buyers of single family homes, condos, or other residential real estate know what to look for when reviewing a title search report (especially when the home being sold is a foreclosure). This review is usually to occur at least 5 days before the closing (see the “Title Evidence and Insurance” provision of your Residential Contract For Sale and Purchase).

Simply stated, the title insurance policy is designed to protect the buyer for years into the future.  The policy represents to the buyer that he or she has clear and marketable title to the real estate — no contractor is going to be knocking on their door demanding to be paid for work done before they bought the place or there are no unsatisfied mortgages, for example.

Title insurance underwriters have title agents (title companies or lawyers) that conduct the title search,  issue the title insurance policy and close the transaction. Florida title insurance lawyers understand the duties and liabilities that come with title insurance coverage, and have an ethical obligation to assist buyers and sellers with making sure that the closing proceeds with as much protection as possible against future title challenges (most Florida real estate lawyers perform these services, along with closing the transaction, at no more expense than what a title company will charge to close the transaction).

For More Information, Read: 19 Reasons to Hire a Real Estate Lawyer When Buying or Selling A Home

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Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

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