Florida Title Company or Real Estate Lawyer: Who Should Handle Your Closing?           

Posted By on March 20, 2018

Florida does not require an attorney to oversee a residential real estate transaction.  A buyer can purchase a home or condo in Florida and get a mortgage without getting legal advice from an attorney. A real estate agent can provide standardized contract forms, and a title company can issue title insurance and conduct the closing.

However, there are several important issues to consider when deciding whether or not to hire an attorney to conduct a real estate closing.

Florida topographic map-en

Florida residential real estate can have water access issues from ocean front to Gulf access, to the inland lakes, streams, wetlands, and protected freshwater swampland.


 

24 Issues To Consider When Choosing Between A Title Company or Real Estate Lawyer To Close Your Real Estate Transaction

When a buyer purchases a home or condo here in Florida, he or she will be dealing with a unique piece of real estate that has its own idiosyncrasies.  Not only do we have a large amount of waterfront properties for sale, but there is also an abundance of foreclosures or property that was once subject to a foreclosure lawsuit (particularly in South Florida).  Also, our area has a high percentage of condominiums which have their own legal peculiarities.

Below are some common legal issues that can arise in connection with a South Florida real estate closing, that only a Florida real estate attorney is authorized to address:

1. Seller’s Legal Duty To Disclose Defects

Under Florida law, the seller must disclose issues regarding the property that the seller knew about, or should have known about, which a buyer would not be able to discover even with an inspection.

A Florida lawyer can assist here in incorporating language in the real estate contract requiring the seller to meet their duty to disclose.

2. The Inspection (The inspection contract and the inspection report)

A Florida lawyer can read the inspection report and the inspection company’s contract to make sure the buyer is adequately protected.  Inspections companies like to limit their liability to the cost of the inspection report. Many inspection contracts will have language protecting the inspector against inaccurate information and failing to identify issues with the property.

3. There Are Risks In Buying A Foreclosure

Buying a foreclosure comes with its own set of risks, including defects in the underlying foreclosure lawsuit.

How will a defect in the underlying foreclosure lawsuit impact the buyer’s ownership rights? What happens if, for example, the prior owner challenges the foreclosure based upon the mortgage being fraudulent (the mortgage was obtained without the prior owner’s knowledge)?

4. Buying A Home Involved In Litigation Can Be Complicated

Sometimes, the single family home or condo is subject to a lawsuit other than a foreclosure proceeding.  The litigation may be a bankruptcy, partition action, divorce, or probate proceeding.

Each type of litigation comes with its own particular complications.  A real estate attorney can review the court file, including any outstanding court orders, to ensure compliance, and address any legal issues that can impact the marketability of the property.

5. The Lease Agreement

Sometimes, residential property is bought as an investment and the property is sold to a buyer who has no intention of renting the property.  A lawyer can review and answer questions about a lease agreement, prepare an assignment of lease, and facilitate an eviction.

6. Condominium Rights And Restrictions

There are extensive laws in Florida that relate specifically to condo unit owners and condominiums.  Anyone purchasing a Florida condo should know what their rights and duties will be as a condo owner. For instance:

  • will they be able to rent the condo?  If so, how often and for how long?
  • Is there an age requirement?
  • Can you have pets?
  • What about storage, parking, and dockage?
  • Can the new owner transfer his or her interest in these elements and who is responsible for the cost to maintain them?

7. Waterfront Property

Florida is surrounded by the Atlantic Ocean and the Gulf of Mexico, as well as the inland waterways and our renowned wetland areas.  Some waterfront residential property is subject to restrictions.  Does the waterfront property have riparian rights? Can the buyer build into the waterway for a dock or other structure? These are just a few of the issues to consider when buying a waterfront property.

8. Buying Personal Property With The Real Estate

What happens if the buyer wants to purchase some of the seller’s personal property (like patio furniture, a chandelier, or dining room table)? An attorney can counsel on how to structure a real estate transaction when personal property is being purchased along with the real estate. How do you allocate the purchase price between personal property and real property and what are the tax ramifications related to capital gains taxes and sales tax? Is the personal property a fixture and not separate property subject to sales tax?

9. Code Violations

All residential property must comply with the applicable building and municipal codes.  A Florida lawyer can explain the ramifications of a building code violation (like for an illegal conversion or enclosure, or a non-permitted bathroom) or pending code enforcement liens for uncut grass or a broken fence.

10. Boundary Issues

Every residential property has legally defined boundary lines.  A Florida lawyer can give legal advice on any adverse matters shown on a survey, like easements encroachments, and other boundary issues such as fence lines and pool decks.

11. Different Ways To Own Real Estate; Different Deeds

In Florida, there are various ways to hold legal ownership of residential real estate.  A Florida lawyer can explain the pros and cons of these different forms of ownership (tenants in common, tenancy by the entirety, and joint tenants with the right of survivorship) and counsel on the different types of deeds, which include:

  • Quit Claim Deed,
  • Warranty Deed,
  • Special Warranty Deed,
  • Trustee Deed, and
  • Personal Representative’s Deed.

12. Risks To Resolving Title Issues

A Florida lawyer can provide advice on the various methods to resolve common title issues and explain the related risks associated with each of the methods.

For example, if the buyer is purchasing a condominium, then the lawyer can explain the ramifications to a buyer of any litigation that may be pending against the association, or the ramifications of a construction related notice of commencements filed against the association.

13. Documents In The Chain Of Title

A real estate lawyer can explain the impact of agreements recorded in the public records which might affect the marketability of the title to the property. For example, restrictions and reservations found in deeds, like restrictions on the type of home that can be constructed on the property or the reservation of an easement for ingress and egress to a roadway or water access.

14. Closing With Open Title Issues

Some title companies are willing to close a transaction with issues in the chain of title simply because their title insurance underwriter is willing to issue a title insurance policy. However, there are risks of closing a deal with certain title issues pending against the property.

A lawyer can provide advice on the ramifications of closing a deal if, for example, a wild deed or an unsatisfied mortgage is found in the chain of title. Just because a title company issues a title insurance policy doesn’t mean there aren’t problems in the chain of title that a future buyer of the property can raise to terminate a deal.

15. Deed Requirements

A lawyer can give an opinion on the validity of a deed and on the requirements to record a deed in Florida. Was the deed executed in accordance with Florida Law? (See Fla Stat 689.01 & 695.26) What is the significance of the dates written on the deed? Which date matters?  Is it the date the deed is signed, delivered, acknowledged or recorded?

16. The Obligations Of A Real Estate Agent

A lawyer can provide advice on a real estate agent’s responsibilities during the closing process, like having the seller disclose facts about the property that they know will materially affect the value of the property and that are not readily observable or known by the Buyer.

17. When An Entity Is A Buyer Or Seller, The Closing Can Be More Complicated

If the buyer or seller is an entity, an attorney can review the governing instruments to determine who has the authority to act on behalf of the entity as well as determine what documents are needed to effectuate the transaction. Included here are trust agreements, shareholder agreements and operating agreements.

Are the documents provided by the entity legally sufficient to effectuate the transaction? Who created the documents? Have all of the statutory requirements provided for under Florida law been satisfied?

18. Foreign Sellers Of Florida Residential Real Estate

Many sellers of Florida residential real estate reside in other countries.  The IRS has withholding requirements related to certain foreign sellers that a buyer is obligated to follow.  A real estate lawyer can explain the notice requirements necessary to exempt a transaction from the FIRPTA withholding requirements.

19. Who Does The Title Company Answer To When It Conducts A Closing?

If you hire a Florida real estate lawyer, you create an attorney-client relationship and the lawyer is your fiduciary.  He or she answers to the party that has hired the lawyer.

If you rely upon a title company as closing agent, that title company acts as an agent for the title insurance company or title underwriter.  The title company answers to the underwriter.

20. Negotiating The Agreements

A lawyer can negotiate on behalf of the buyer and provide legal advice from the time the listing agreement or contract is signed to the time the deed is recorded and the title insurance policy is issued.

The lawyer can review, negotiate and create addendum, escrow agreements and any occupancy agreements (pre-closing and post-closing).

Furthermore, a lawyer can provide advice on issues and/or defects found during the final walk through inspection.

21. Affidavits

A Florida real estate attorney can explain the ramifications of signing, under penalties of perjury, any of the 100+ types of affidavits that are used to address common title issues.

22. Duties Related To The Mortgage Company

A real estate lawyer can explain both the lender’s duties to the buyer (borrower) as well as the borrower’s duty to disclose certain information to his or her lender like a change in circumstances before closing (such as changes in income, job status, marital status, etc.).

23. Changing Ownership After Closing

Often, a buyer will want to transfer the home or condo to someone else, or add a parent or other family member to the deed, after the transaction closes. Doing so may cause a breach of certain provisions in the mortgage, like a due on sale clause.

Look At The Bottom Line When Choosing Whether Or Not To Hire a Florida Real Estate Lawyer to Conduct A Residential Closing

So far, we have listed 23 reasons why having a Florida real estate lawyer working on your residential closing in lieu of a title company is a good idea.  Now, the reason that matters most:

24. While The Benefits Are Greater, The Expense Is Much The Same

Financially speaking, there is no difference between having a Florida real estate lawyer handle a residential closing and a title company closing the deal.  However, having an attorney at the closing ready to provide advice can be invaluable to a buyer, especially when any of the above issues arises during the residential closing process.

What Should You Do?

A good piece of advice if you are buying real estate in Florida, is to speak with an experienced Florida real estate lawyer to learn about your rights, including those related to disclosures, inspections and title insurance. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

Related: 19 Reasons To Hire A Real Estate Lawyer

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Picture of Larry Tolchinsky

Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 

 

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