Here in South Florida, closings on residential real estate happen every day. Condos are purchased as retirement homes and as investment property; homes in neighborhoods like Coconut Grove, Brickell, Broward and Palm Beach are sold to families that may be moving across town or from across the country. In Miami, there are lots of residential real estate closings occurring which involve foreign buyers who may be experiencing for the first time American (and Florida) real estate laws at work.
Florida real estate lawyers are hired all of the time to represent buyers and sellers in these transactions, to help answer questions and guide their clients through the closing process.
In our office, the most frequently asked real estate questions that clients want answered about their closing relate to the following five topics:
1. Does Florida Require Everyone To Be Present At The Closing Table?
As the purchase and sale process nears its end, the parties always ask, especially the realtors, “when is the closing?” and “do i need to be at the closing table?” That all-important time period of when the residential real estate transaction closes, where the buyer pays the purchase price and the seller transfers the keys to the home, can sometimes be a harrowing experience for the parties simply because they will be out of the state on the scheduled closing date.
The good news is, that Florida does not require everyone to be at the closing table. When the seller or the buyer are unavailable because they are outside the State, residential closings can be done in what is called a “mail away.”
In a mail away closing, the documents can be sent to either the buyer or the seller via overnight delivery, email attachment, or by fax. Funds can be provided by online transfer or by wire. Here, the buyer or seller’s attorney or real estate agent act on behalf of the buyer or seller using a power of attorney. These situations happen all of the time and most mortgage lenders and closing agents know how to handle these transactions. The main issue with a mail away is making sure the party signs the documents correctly, including having the documents properly witnessed and notarized. (Please note: To address some of these issues, the Florida legislature passed a law allowing remote online notarizations. Remote online notarizations are not right for every closing, so check with your lender and closing agent to see if this procedure is available in lieu of a mail-away closing.)
2. How Do I Deal With Disclosure Issues About The Property?
In South Florida, homes are subject to conditions like mold and other naturally occurring matter. Some homes have been built with Chinese drywall and others may have lead paint concerns.
With these issues, comes the question about disclosure. Residential real estate closings in South Florida are impacted by common disclosure disputes, including requirements to disclose information about plumbing issues, septic tanks, radon, roof leaks, termites, flooding and other items that affect the value of the property.
In fact, most standard real estate contracts should include a seller disclosure form. The seller disclosure form should be made part of the real estate contract and the transaction should be contingent upon the buyer approving the contents of the disclosure form.
3. Does A Cash Transaction Change The Way a Closing Occurs?
It’s interesting to learn how often homes are purchased for cash here in South Florida. Meaning, buyers don’t obtain a mortgage or home loan; instead, they pay the entire purchase price in cash.
Routinely, buyers coming from foreign countries buy their Florida condo using cash. Buyers coming from South America, for instance, are accustomed to the practice of paying cash for real estate because in their part of the world, this is the standard way of doing things.
According to CoreLogic, South Florida leads the country in cash sales for residential homes. Their studies show that in 2013, for instance:
- Miami-Miami Beach-Kendall, Fla. = 56.6% cash sales (no. 1 in the USA)
- West Palm Beach-Boca Raton-Delray Beach, Fla. = 56.1% cash sales (no. 2 in the USA)
- Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. = 55.6% cash sales (no. 3 in the USA), and
- Cape Coral-Fort Myers, Fla. = 55.2% cash sales (no. 4 in the USA).
Buying a home or condo for cash can make a big difference in a Florida closing. In many ways, things are simplified and transactions close quicker: there is no lender to deal with because there is no mortgage. Lenders aren’t involved to underwrite a loan and to demand things like flood certifications, income verification, review appraisals, and require that insurance policies be prepaid, for instance.
However, the absence of a lender means that the buyer needs to be that much more diligent in protecting their interests in the transaction. Banks can complicate things, but lender involvement also helps to identify potential risks and problems in a deal.
4. Can A Real Estate Agent Give Advice Even Though They Are Not Lawyers?
For many sellers and buyers, their real estate agent becomes their confidant during the purchase process. Agents can be friendly and helpful, and are there to answer questions and calm fretful nerves. However, that doesn’t mean that they are lawyers or that they have the ability to provide legal advice on issues like disclosure or title issues.
Even though there are standardized real estate forms, like sales contracts and property disclosures, these forms are legally binding (some forms have been approved by lawyers and realtors for use by Florida real estate professionals). However, even though real estate agents usually provide these forms to the buyer or seller — the agents shouldn’t answer questions about what the language in those documents mean or what disclosures a seller must make about a property — that’s giving out a legal opinion which is a violation of Florida law (it’s called the unauthorized practice of law).
5. Have Florida Closings Changed Because of Dodd-Frank?
Beginning August 1, 2015, the disclosure forms used in a Florida residential real estate closing have changed dramatically. The HUD-1 Form is no longer be used with first mortgage transactions, (that is the document that shows all of the costs related to closing the transaction, including the costs and expenses related to obtaining a mortgage). Instead, a new Closing Disclosure (CD) will be used (it replaces both the HUD-1 Form and the current Truth-in-Lending Disclosure form).
Deadlines for closing have changed, too. New time frames have been implemented, including a three (3) day deadline for mortgage lenders to provide their home loan closing documents. For more on these requirements, check out the information provided by the Consumer Financial Protection Bureau (CFPB).
Transitioning to the new requirements has been confusing for many, including some closing agents. That’s why having an experienced real estate lawyer by your side to guide you through the closing process can be invaluable. The cost of hiring a lawyer is usually less than most clients fear.
What Should You Do?
A good piece of advice if you have a question about a Florida real estate closing is to speak with an experienced Florida real estate lawyer to learn about your rights. 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.
To learn more, read our extensive collection of real estate closing articles, including:
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