Watch Out for Unlicensed Real Estate Agents in Florida

Posted By on September 16, 2014

Be careful not to be the victim of an unlicensed real estate agent or real estate broker when buying or selling Florida real estate. 

 

Real estate transactions that are based upon mistakes or fraud can cause serious harm to buyers and sellers — accordingly, the Florida real estate industry is heavily regulated — this has never been more true than the last few years of rampant foreclosure fraud.

Florida Real Estate Industry is Heavily Regulated

In Florida, laws written by our Legislature as well as court decisions act to protect both commercial real estate transactions and residential real estate deals. However, residential sales are offered much more protection because average citizens are not assumed to be as savvy as business persons in buying and selling property; thus, residential real estate is more vulnerable to wrongdoers taking advantage.

One of the ways that people are protected by Florida law from being hurt in the purchase or sale of a Florida home or condo is by the statutes requiring all real estate agents and real estate brokers to be licensed by the State of Florida.

Specifically, people who wish to work as real estate agents in the Sunshine State must meet the requirements of the Florida Department of Business and Professional Regulation (”DBPR”) in order to be issued an official license to act as a real estate professional here. That’s not all. Every year, they have to continue to meet the licensing requirements of the DBPR including keeping up with educational requirements and other prerequisites for maintaining their license in good standing.

Unlicensed Real Estate Agents Operate Illegally

Nevertheless, there are unscrupulous individuals who are active in the Florida marketplace who try to profit from real estate commissions without bothering to be officially licensed with the DBPR. Those people likely will not have the knowledge and expertise of a licensed Florida real estate agent, and even if they do, they may well not bother to adhere to the ethical considerations of licensed real estate professionals.

In Florida it is a serious crime to act as a real estate agent without being properly licensed. It is a felony under Florida Statute 489.127 to act as a real estate broker or a real estate agent in the State of Florida without proper licensure.

Not all unlicensed real estate agents are operating with criminal intent, but they are all outlaws in the sense that they are working illegally because they have failed to get a real estate license in order to do the work.

Dangers of Working With an Unlicensed Real Estate Agent or Broker

It is dangerous for buyers and sellers of Florida residential property to work with someone who is not vetted by the DBPR and properly licensed in good standing as a real estate professional. It is risky for the financial well being of those involved in the transaction, and it may sometimes be personally dangerous as well.

Think about it. Going to see empty properties with one of these Black Market agents may invite personal harm to you or your family in the form of theft or worse as well as risking your finances and money to someone who is operating under the radar.

Protecting Yourself Against an Unlicensed Real Estate Agent

The easiest way to make sure that you are protected against an unlicensed real estate agent is to ask for verification of a DBPR license. The DBPR website can also be used to confirm that a real estate agent or real estate broker is operating legally. Just go to www.MyFloridaLicense.com or call the DBPR at 1-850-487-1395.

If you have been working with an unlicensed real estate agent or broker, you may be thinking it will allow you to pay less in commissions or otherwise get a better deal. Don’t count on it. And if you do go through with a closing and later find you’ve been harmed by an unlicensed agent, then your legal remedies may be limited.

A large percentage of licensed real estate agents and licensed real estate brokers have protections in place (like errors and omissions insurance policies) in the event that someone is harmed in a real estate deal. Unlicensed agents rarely have the same protections set up for you, and the reality is that they may even be hard to locate after a closing and after the discovery that you’ve been harmed.

If you think you have been or may be involved with an unlicensed real estate agent in a Florida residential real estate transaction, then getting help from a Florida real estate lawyer can be invaluable in protecting you in what may be one of the biggest transactions of your lifetime, buying your family home or retirement condo. There may be ways to block or to minimize the harm here that a Florida real estate attorney can explain and implement to help you.

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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.

What is the Real Value of Your Florida Home? – Breaking the Rules to Get a Deal Closed

Posted By on September 9, 2014

South Florida real estate has been the victim of rampant appraisal fraud in recent years.

 

The Importance of Real Estate Appraisals

It’s basic, if you want to buy a home in Florida with a mortgage, you need an appraisal of the property (you also need one if you want to refinance your mortgage). Appraisals are formal documents containing an expert analysis of the market value of the real estate. These expert opinions are used by lenders in evaluating whether or not to loan money, how much they are willing to loan to the borrower and whether or not the borrower can afford to repay the loan.  Unless you are paying cash, then you’ll need to have the real estate appraised in order to close the deal.

Appraisers Provide Appraisals

Only certain people can provide real estate appraisals in Florida. These are professionals who are licensed real estate appraisers. They have specific education and expertise in valuing property and they are supposed to provide independent, ethical, unbiased analysis of real estate. You should be able to trust the appraisal to be accurate and fair.

Appraisal Fraud in Florida

Appraisal fraud happens when an inaccurate appraisal is used in a real estate transaction to the detriment of one of the parties involved (usually the buyer). When the expert appraiser does not provide the true analysis of the property, but chooses to give a grossly inflated value of what the home is worth in the current real estate marketplace, this may be appraisal fraud. Their report will not be accurate and unbiased.

Normally, the appraiser is honest and he/she provides a reliable appraisal report. However, there have been instances where the report is manipulated by another party so that the appraised value is increased higher than the real market value. This appraisal fraud can be done by a real estate agent or by the lender in order to make the sale or loan transaction happen.

For many years, appraisals were trusted and assumed to be unbiased and fair, no one suspected that they could be phony — until the rampant foreclosure fraud that occurred here in Florida.

Why is there appraisal fraud?

When someone inflates a real estate appraisal, a lender can lend more money on a mortgage loan (An artificially inflated appraisal can skew the Loan-to-Value Ratio used by lenders in determining whether or not to lend or to refinance a mortgage).

Also, in my experience, a segment of real estate agents, all of whom work on commission of up to 7%, are tempted to find “ways” to move a  lot of real estate and to close deals quickly.  Having a reputation of “getting deals closed” and getting seller’s “all of the money” can cause some to bend the rules.

How can you protect yourself against appraisal fraud?

In a real estate transaction, you can always pay for your own appraisal to be done by an appraiser you trust. You can also confirm an appraisal in some ways by comparing the appraised value with home sales in the area in the past few months, searching MLS or Realtor.com for sales information or asking for a independent appraisal review or a second appraisal.

For example, many lenders have been known to check property values on online sites like Zillow to check for home market values as part of their approval decision-making, even though the Zillow “zestimate” isn’t a formal, independent valuation by a professional appraiser. The Zillow Zestimate may not be an exact valuation of your home, but it may help you to determine whether or not the appraisal you’re got in hand is questionable.

For more information on appraisals and appraisal fraud, please feel free to contact a Florida real estate attorney for guidance. Your real estate lawyer can help you not only to close the deal with an accurate market value; if need be, your real estate lawyer can help you advance claims against anyone who presented you with a fraudulent appraisal in order to obtain damages from them for their fraudulent acts.

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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 Foreclosures – What’s Happening Now?

Posted By on September 3, 2014

Update on what we are seeing now with Florida foreclosures and related issues –

1. Foreclosure filings have remained steady in the last few weeks – this is based upon the number of calls we are receiving and on the number of lis pendens being filed, per week, in Broward County Public Records – (Broward County is the 2nd largest County in Florida by population) – In the last 2 weeks the number of foreclosure filings has averaged 230 per week.

2. Florida Deficiency Filings – In light of the passing of the July 1, 2014 deadline, there has been a reduction in the number of deficiency judgment cases filed by Dyck O’Neal  – however, a lot of homeowners still have yet to be served (due to homeowners  either having moved out of state or having never lived in the State – banks are required to personally serve the lawsuit upon the former homeowner). Banks have 120 days to serve their lawsuits but are permitted to extend this deadline. See:

3. Foreclosure Defenses – 2 questions we often hear from clients relates to lost promissory notes and the 5 year statute of limitations.  See:

4. Foreclosure News – Bank of America entered into a $16.65 billion settlement agreement with the Department of Justice to resolve federal and state claims against the bank, including Countrywide and Merrill Lynch. As part of the settlement, (Read the press release here) the bank has agreed to pay a $5 billion penalty and provide billions of dollars of relief to struggling homeowners, including funds that will help defray tax liability as a result of mortgage modification, forbearance or forgiveness.

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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.

Home Inspectors and Real Estate Agents in Florida: Buyer Beware

Posted By on August 26, 2014

For many home buyers in South Florida, finding that right house or condo to buy is an exciting moment. Some houses sound great on paper or look fabulous on online, but when you do a walk-through, the place just isn’t right. You keep looking until you find the property that you want to buy.

Most Buyers know the feeling — you go see a property, and it just feels right. Most if not all of your wish list is met. You’re ready to make an offer.

Closing on your waterfront Florida condo can be one of the most exciting days of your life!

However, as a smart purchaser you know that residential real estate can have all sorts of problems, especially here in South Florida. Unless you are savvy about things like plumbing, foundations, electricity, and more, it’s best to get help from a professional home inspector before you close the deal.

Real Estate Agents and Home Inspectors

Home inspectors are not a trade that most people use very often, and many home buyers will not know a home inspection service first-hand to call. Unfortunately, many Florida buyers rely on their real estate agent, who is quick to recommend a home inspector to the buyer. The real estate agent may even offer a few names for the buyer to choose from for the home inspection.

When this happens, it is my suggestion for you to be very careful!!

It’s very tempting for a real estate agent to offer the name of a home inspector who will work with that real estate agent to help get the sale nailed down. The inspector and the agent may be friends; they may be worse — partners in crime where the inspector gets a benefit from the agent for each “friendly inspection.”

Real estate agents profit from commissions on the sale of property. It’s in their best interests to get that property bought and sold. Home inspectors profit from inspections; the more they do, the more profit they make.

Florida home buyers shouldn’t be surprised to think that there may be real estate agents and home inspectors that find working together benefits both of them. Buyers need to realize that a home inspector referral from a real estate agent may be suspect and not in the buyer’s best interest. This is especially true if the real estate agent is working under a “transaction broker” arrangement which limits their responsibility to the buyer.

Long after the “friendly home inspection,” that naive home buyer may discover big problems with the purchased property: things like mold hidden behind walls or under flooring; the use of Chinese Drywall in the home; termites; failure to meet code requirements; and other expensive problems.

When the best interests of one party clash with the best interests of another, that’s a conflict of interests. In some of these situations, the buyer who has been harmed by a flawed or phony home inspection may have a real estate fraud lawsuit against the real estate agent, the seller and maybe the home inspector, too.

What Home Inspectors in Florida Should Do for Buyers

Home inspectors should provide the prospective home buyer with an accurate assessment of the conditions and quality of the home or condo they are thinking about buying. Inspectors should provide a written report that explains what they reviewed during their inspection of the property and details their findings and opinions on the home or condo.

Inspections should be thorough. Inspections that are done right are not cheap, but they are very important for a home buyer to have.

Florida Home Inspectors Aren’t All the Same

In Florida, new licensing laws were passed a few years ago (in 2011) that expanded the ability of individuals to get licensed by the State of Florida as a home inspector. If an applicant can pass the test, then they can become a Florida home inspector. From the NSHI site:

Florida Home Inspector Licensing Program
Florida grandfathering provisions for home inspector licensing ended on March 1, 2011. Home inspectors who currently want to be licensed for Florida must obtain a home inspection license from the Florida Department of Business & Professional Regulation. (FL BBPR)

Florida Statutes Chapter 468, Part XV requires:

(1) 120 hours of approved course instruction that includes 20 hours of hands-on training
(2) Pass the National Home Inspector Examination (NHIE) sponsored by the Examination Board of Professional Home Inspectors
(3) $300,000 commerical general liability insurance.

To apply for a Florida home inspection license, the applicant must have a high school diploma or its equivalent, complete an electronic fingerprint background check, be of good moral character, and include a $330 license fee.  

There are no experience requirements to apply for a Florida home inspection license and the license must be renewed every two years.

To separate the more experienced and knowledgeable home inspectors from the basic Florida inspector, there are additional qualifications that a home buyer can seek out in their inspector. Things like making sure the person is a paying member of the American Society of Home Inspectors (ASHI), for example.

Home inspectors with over 250 inspections can be designed as “certified home inspectors” by ASHI. If the home buyer has specific concerns about conditions, then he or she can look into hiring an inspector with specific expertise in that area, e.g., an inspector with a Mold Services license.

Additionally, home buyers should confirm that their home inspector has current malpractice (“E&O”) coverage, in case he makes an error or omission during the inspection of the buyer’s property. The prudent home buyer will also make sure that the inspector carries coverage to cover any personal injuries he may sustain during the inspection.  (Also, look at the Contract with the home inspector to see if they limit their liability.)

What Should a Florida Home Buyer Do if Harmed by a Faulty Home Inspection?

If you have purchased residential real estate here in Florida and find that the inspection of the home did not reveal defects in the property, then you may have a claim against the inspector as well as the seller and perhaps the real estate agent (and his or her real estate broker) for damages. Each circumstance is unique, and needs to be analyzed and assessed by an experienced Florida real estate lawyer.

Unfortunately, many Florida home buyers have been hurt by Florida home inspectors (especially since 2011 when the licensing law changed) and Florida real estate attorneys have many war stories about bad inspections and the damages that have resulted from them.

 

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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.

Property Disclosure Statements: Duty to Reveal Hazards in Florida Must Be Disclosed to Home Buyers

Posted By on August 19, 2014

Most sellers and buyers of residential real estate here in Florida depend upon their real estate agents to help them through the process. For buyers, it’s making sure that they have all the information that they need to make an informed purchase. For sellers, it’s relying upon their agent to know what must be shared with the buyer and what need not be told to them in order to get the house sold.

In Florida, disclosures to real estate buyers are governed by case law and by statutory law; statutes were written and court cases were filed because sellers all too often failed to reveal something about the property which ended up harming a buyer. As a result, certain disclosures are now mandatory in every residential real estate transaction.

Still, sellers and buyers will continue to lean on the real estate experts to make sure that all the disclosures are being made — and there will be times when things are not revealed to buyers that should have been disclosed.

Which brings us to Florida and flood risks.

New August 2014 Broward County Flood Zone Maps

Yesterday (August 18, 2014), new flood zone maps became the law in Broward County, Florida, according to the Federal Emergency Management Agency (FEMA). These flood maps apply to all property in the county (there are similar maps for Miami-Dade and Palm Beach Counties, too).

These maps break down the risk of flooding in Broward County into “flood zones,” assigning areas with the biggest dangers of flooding due to storms or hurricanes with a specific zone designation (A, AE, AH, etc.).

Some flood zones legally require property owners to have flood insurance for their property. Other flood zones do not make flood insurance a legal requirement, but they may suggest flood insurance might be prudent.

It’s important to know what flood zone applies to any potential Florida real estate purchase.

Disclosure of Flood Risk is Required by Law

FEMA’s new August 2014 flood maps mean that real estate agents and real estate brokers need to disclose to potential buyers of real property in Broward County of their flood risks and flood insurance requirements under these new FEMA guidelines.

Broward County has published the flood maps on its website, and encourages the public to review the flood zones. Broward.org reminds everyone that in this part of the state, ”[a]ll areas are susceptible to flooding, although to varying degrees.“

Go here to see the new interactive flood zone maps at the Broward County web site.

Now that this information has been made available to the general public, real estate agents and brokers (and sellers) have a duty to disclose to buyers (or to make sure buyers are aware) of the flood risks associated with a particular piece of property;  buyers looking to purchase a home or condo in Broward County, should have the new August 2014 Flood Zone information provided to them regarding their potential purchase.

Flood Insurance Coverage as a Mortgage Requirement

One protection for buyers in Florida is the requirement that any property that is located in a flood zone, where the purchase is financed with a federally-backed mortgage, must be covered with flood insurance. Whether or not a private mortgage will demand flood insurance coverage depends upon that lender.  (Note, if a buyer purchases a property with cash, then the buyer has no outside party helping to protect them by requiring the purchase of flood insurance.)

A Florida Real Estate Lawyer Should Review The Disclosure Statements Before The End of Your Inspection Period

A Florida real estate lawyer who is routinely involved in real estate transactions should know to review the Property Disclosure Statement for you before the end of your inspection period. If necessary, the lawyer should address any issues he/she finds in the disclosure statement with the broker, agent and/or Seller, and negotiate those for you (maybe a lower price or a warranty?).

Ultimately, an experienced real estate lawyer should be able to guide you into determining whether or not you should go forward with closing in view of any problems that may exist — like a changed flood zone.

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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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