Last Update: 8/15/18
The event where a Florida condominium or single family home changes hands, where ownership of the property goes from the seller to the buyer, is called the “closing” or the “closing of the transaction.” When the buyer leaves the closing table, he or she leaves with keys to the front door; the remote for the garage door; the code to the alarm system; and legal title to the property as its new legal owner (the deed is delivered to the buyer).
What is a Real Estate Closing?
In Florida, a real estate closing is a settlement and finalization of a real estate sales transaction. For residential real estate, a closing will usually involve the buyer signing things like the home loan documents (i.e mortgage, note, loan disclosures, same name affidavits, etc.) in order to allow the seller to be paid the agreed-upon sales price for the property. The seller can expect to pay for things like real estate commissions, prorated condo dues and ad valorem property taxes, as well as any attorneys fees or closing fees at the time of closing.
Closings are often held at the offices of a title company or real estate brokerage, or at a real estate lawyer’s office. The “closing date” will appear in the purchase and sale agreement (aka “contract”).
Once the transaction closes, a few weeks will pass from the time that the buyer and seller sign the closing documents to the time that the Warranty Deed or Quit Claim Deed and other legal documents are recorded at the county courthouse and they are returned to the buyer along with their title insurance policy.
10 Steps to a Florida Residential Real Estate Closing
Getting from the buyer’s first introduction to the property to that closing table can be a lengthy and complicated process. Here are ten steps that most Florida buyers and Florida sellers go through to get to closing.
1. Earnest Money Deposited
When the buyer finds a home or condo that she likes, she makes an offer on the property to buy it and provides “earnest money” as consideration to be held by the escrow agent (when representing the buyer, we usually recommend that our office hold the deposit).
2. Apply for a Home Loan
The buyer finds a lender who will loan money for the purchase of the condo or home and applies for a residential mortgage. Most transactions allow for the contract to be contingent upon the buyer obtaining conventional or FHA financing for the purchase.
3. Appraisal of the Property
A licensed appraiser selected by the buyer’s lender visits the property and prepares an appraisal of its value.
4. Title Insurance
A title insurance agent issues a title insurance commitment that shows the owner of the property according to the public records and lists any liens or other encumbrances against the real estate and lists all of the requirements for the issuance of a final owner’s title insurance policy.
5. Inspection for Termites and Damage to the Property
Given Florida’s humid and hot climate, termites are a real threat to real estate improvements here and professional inspectors will check the property for evidence of termites and issue a report. The buyer will also inspect the roof, the electrical, the pool, appliances, etc. to determine if they are in working order. (If the property is sold “As-Is” the buyer still conducts inspections to learn what, if any, issues the property may have.)
6. Survey of the Property
A real estate surveyor will confirm the real estate boundaries of the property to make sure, among other things, that the property description is accurate, their is ingress and egress to the roadway or right of way, and report any encroachments or easements that can adversely impact the value of the property.
7. Hazard, Wind and Flood Insurance for Buyer
In Florida, flood insurance may well be required by the lender (see FEMA maps) for the residential real estate as well as windstorm coverage, which depends on the zone location of the property.
8. Preclosing Inspection of Property
Before closing, an inspection or walk-through of the property to insure that any agreed-upon fixes, furnishings have been removed, missing shutters replaced, or other hurdles to closing the transaction have been completed.
9. Closing Documents Prepared and Reviewed by Buyer and Seller
The parties, and their lawyers, need to review the final documents that will be signed at the closing table and make any changes that are needed. These documents can include the following in a Florida residential real estate closing:
- Promissory Note
- Warranty Deed
- Closing Disclosure and Loan Estimate
- Bill of Sale for furnishings – like hurricane shutters, pool equipment, washer and dryer, refrigerator, etc.
- Affidavits and other title clearing documents (e.g., representing the house was the homestead of the seller or the seller is not a foreign person subject to FIRPTA)
10. Money Ready for Exchange
The earnest money deposit, the additional buyer proceeds, along with the mortgage loan funds will be transferred from the closing agent to the seller once the buyer is authorized to close the transaction (e.g., the mortgage lender gives it approval to close the loan transaction).
Why Should a Lawyer Conduct The Closing?
Florida buyers and Florida sellers are fortunate when they have a smooth closing process where problems — sometimes serious ones — don’t occur. Having a Florida real estate lawyer represent the buyer or seller to get through the closing process is always helpful and often much less expensive than people think. In fact, in most instances having a real estate lawyer close your transaction will cost no more than a title company will charge to conduct the closing. And, if there is a problem, there’s no need to worry about running around to find a lawyer to represent your interests, he or she is already there to help.
A good piece of advice is to at least speak with an experienced Florida real estate lawyer to learn about your rights and learn how they can help. 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.
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