In a Florida residential real estate purchase, few days are bigger than the day that the transaction closes. Sure, there is the excitement of beginning the process of finding a home or condo to buy here in South Florida, and the thrill of finally choosing a particular property and having your offer accepted.
However, when a buyer leaves the closing table he or she’s no longer a buyer: they become an OWNER.
From the perspective of a Florida real estate lawyer — especially after the recent foreclosure fraud catastrophe — the day of closing is the day of making sure the buyer knows exactly what it is they are buying and signing. (For more on Florida foreclosure fraud, check out our free e-book, “The Non-Lawyer’s Guide to Foreclosure Fraud 2011.”)
For more about the details of a Florida residential real estate closing, check out our earlier posts including:
- 4 Conditions A Buyer Should Require Before Closing On A Florida Home;
- 10 Things A Florida Home Buyer Should Understand About Their Mortgage Before Closing;
- What Happens When A Buyer Discovers Condo Water Damage After Closing?
Our Common Sense Closing Day Checklist
Since this day is so important in the home purchase life cycle, we are sharing the following information and suggestions for residential home buyers who are ready to close on their new Florida home or condo:
1. What To Bring To The Closing
Most buyers that come to the closing table need to come with more than just a pen ready to sign all those closing documents. They will likely also need the following:
A. The Closing Funds
According to the standard FAR/BAR contract, Florida residential buyers need to bring to the closing a cashier’s check with them in the amount set forth in the closing disclosure given to them by the closing agent. Unfortunately, even though the FAR/BAR contract states a cashier check may be used, most closing agents will only accept wired funds. This is because there have been so many fraudulent transactions in South Florida involving fake cashier’s checks.
Smart buyers will have their checkbook ready, too, in case there are any last minute items that have to be paid before the closing can be finalized. Using a personal check is not acceptable for paying the full purchase price, but they may be fine for smaller amounts, like covering the pro-rata share of a service contract or purchasing some of the seller’s furnishings.
In Florida, the buyer will be asked to confirm his or her identity. Expect to show your current driver’s license and one other form of photo ID (especially if there is a federally insured mortgage involved).
D. Co-Borrower on the Loan
If there will be more than one person taking responsibility for paying the home loan, then they will need to be present at the closing table along with the buyer. Co-borrowers) will need to sign the mortgage documents at closing alongside the primary borrower. (This is also true where the property is being purchased in the name of one spouse – the non-purchasing spouse still has to attend the closing to sign the mortgage, even though he or she is not a borrower – this relates to Florida’s homestead law.)
2. What To Do At Or Before The Closing
When you are buying real estate in Florida, you have a lot of work to do before the deal closes, including:
A. Final Walk-Through
Smart Florida home buyers will have a final walk-through the day of the closing, or the day before closing, to verify that the condition of the property has not materially changed since the date they made their offer to buy the property. Buyers can do this alone, or with one of their professionals if a specific type of problem is a concern. For instance, if there was a crack in the swimming pool, the buyer may want to see the pool one more time before buying the home – and he may want to bring his pool expert with him, just to make sure that he’s getting a fully repaired swimming pool.
There’s always time to negotiate a problem that is discovered during a final walk-through; however, it’s too late to negotiate after you’ve closed on the deal. If you discover a problem the day before closing, then you are going to want to ask lots of questions about it at the closing table — and you will want those questions answered to your satisfaction before you agree to finalize the transaction.
B. List of People to Call If Needed
The home buyer should have a list of people who they can call for help to answer any questions or concerns that pop up during closing. These include their loan officers, inspectors, appraisers, and trusted advisers (like their general contractor).
C. List of Questions to Ask at Closing
Having questions answered is a part of closing, and no home buyer should hesitate to speak up and ask questions at the closing table. Even more important than feeling confident to speak up is to ask these questions before signing any documentation.
Common questions that a buyer might want to ask:
1) Is my homeowner’s insurance included in my monthly mortgage payment?
2) Are my prorated property taxes included in my monthly mortgage payment?
3) If the answer to either of these questions is “no,” then the buyer needs to ask how much these amounts will be, when they are due, and where the payments are to be sent.
4) (For condos) What are the current Condo Association fees? When are they due? Where are these payments sent? Is there a payment coupon? Have the special assessments been paid?
5) How do I file for the Homestead exemption? Where do I get the paperwork to do so?
6) When will I receive my original Deed and when will I receive my title insurance policy?
D. Your File of Documents
There may be the need to reference certain information at closing. This means everything from the MLS listing the buyer received from their real estate agent about the home or condo (does the square footage match with closing documents, like the appraisal?) to the Good Faith Estimate they received from their lender, as well as any notes made during telephone conversations with real estate agents, loan officers, termite inspectors, bank officers, etc.
Documents like (1) proof that there is home owner’s insurance in place and (2) the initial inspection report are good to have on hand, too.
This may mean the buyer will bring lots of paperwork to the closing. That’s fine. They shouldn’t be intimidated or concerned — real estate professionals are accustomed to dealing with lots of documentation. It’s expected.
3. Problems Do Occur At Closing
Closings can be stressful on occasion, and the buyer needs to be prepared for that possibility. Not every scheduled closing happens as planned; they can be (and often are) rescheduled or delayed. There are also closings with unexpected surprises which can be extremely emotional situations for both the buyer and seller.
For instance, a home buyer may discover that his or her lender has decided not to go through with the home loan after all. Eleventh-hour decisions not to fund a home loan can happen.
Why? Often it’s because the lender has discovered the potential borrower has changed his or her position by doing something like losing a job or going out and getting a new car loan right before closing on the house. That increased debt on the buyers’ financial statement may change their debt to income ratios making him or her ineligible for the mortgage.
How Can A Florida Real Estate Lawyer Help?
For many Florida home buyers, having an experienced Florida real estate attorney to work with them in getting their residential real estate purchase completed and finalized can make all the difference between a smooth closing and a stressful and angst-ridden transaction that may or may not close that day.
In most instances, the earlier that the real estate lawyer comes on board, the better: you may want your lawyer to review the contract before you sign to make sure the contract addresses issues like the property appraising for no less than the purchase price or to make sure the seller provides adequate disclosures about the condition of the property and to make sure the buyer is only paying their customary costs to close the transaction. At closing, you may want a lawyer to review the seller documents, the closing disclosure (to make sure you are only paying your share of the closing costs) and to review the title work to make sure everything is correct and customary.
A good piece of advice is to at least speak with an experienced Florida real estate lawyer to learn about your rights. The good news is, that 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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