At a Florida residential real estate closing, the buyer may be excited to get the keys and garage door opener to his new home or condo, but the seller is focused on one thing: being paid. Show her the money!
Of course, the seller does not get actual cash or a briefcase filled with dollar bills (though cash sales remain popular among foreign buyers here in Florida). The seller will be presented with a check, usually an attorney’s trust account check or title company check, or confirmation of a wire transfer into her chosen bank account.
However, getting paid isn’t always that simple: it’s more than meeting the buyer at closing and get paid the sales price. There are lots of legal hurdles between the seller and buyer agreeing on the sale of the Florida home or condo, and the actual exchange of the purchase money.
Here are a few considerations about getting paid for someone who is selling residential real estate here in Florida.
1. Sales Contract Provisions for Payment upon Delivery of the Deed to the Property
In Florida, agreements to sell real estate must be in writing. (Read more about the requirements to have a valid contract to sell real estate in Florida here.) The sales contract, and the provisions therein, control the transaction from the time it is signed by both the seller and the buyer until the closing is completed (and after the closing – see the default provisions in the FAR/BAR contract which usually states certain default remedies survive the closing).
Included in the language of most real estate contracts will be paragraphs discussing the closing procedures to close the deal. The sales contract will outline the buyer’s duty to make timely deposits and to pay the balance of the purchase price at the closing of the transaction.
If the payment is tendered by the buyer, then the seller must perform his or her obligation of delivering the deed and providing marketable title to the real estate.
However, if the buyer presents payment and the seller fails to convey title, then the seller can be considered in default of that sales contract. At that point, the seller is vulnerable to being sued for breach of contract by the buyer.
This is true even if the payment isn’t made exactly as agreed upon in the contract. If the seller accepts money in a form different than is set forth in the agreement, the seller better convey the deed to avoid becoming a defendant in a lawsuit.
In Caldwell v. Snyder, 949 So. 2d 1048 (Fla. 3d DCA 2006), even though the buyer paid a deposit with a cashier’s check rather than by a wire transfer as was described in the sales contract, the court held that the seller waived strict compliance with the sales contract by accepting the cashier’s check and therefore was bound to close the transaction.
2. Payment Must Be Made or The Seller Doesn’t Have to Go Through With the Deal
If the buyer does not show up at closing with the total amount required to close, then the buyer is vulnerable to a suit for breach of contract. It’s also true that if the buyer doesn’t come forward with the earnest money as required by the sales agreement then the buyer’s failure to deposit the earnest money can be held a material breach of the sales contract.
When there is a material breach of a real estate sales contract, then the seller is not required to go through with the deal. The seller’s duties under the agreement are “discharged” under Florida law because of the buyer’s failure (or breach). See, Nacoochee Corp. v. Pickett, 948 So. 2d 26 (Fla. 1st DCA 2006).
What if the buyer provides payment to the seller and the seller loses the money?
Well, that is not the buyer’s problem under Florida law. Here, if the buyer has complied with the sales contract for residential real estate regarding payment, including the earnest money, and the seller loses the payment somehow, then the seller still has to go through with the sale. The alternative? The seller can refuse to transfer the deed to the buyer and complete closing, and risk being sued for breach of contract.
3. Buyer Who is Not Ready, Willing and Able to Provide Payment at Closing May NOT Be in Breach
Most real estate sales contracts provide very detailed steps for how the transaction is to occur, including how the money is to be paid to the seller and how the buyer is to receive title to the real estate. The buyer will provide payment via a wire transfer or cashier’s check, as a general rule, and correspondingly, the seller will provide a valid deed which conveys the real estate to the buyer and can be filed of record in the county clerk’s office to evidence the change of ownership. Usually the seller is required to provide a general warranty deed.
If the language of the sales contract explains that (1) the buyer must pay when (2) the deed is delivered, that exchange is legally considered to happen at the same time. The acts of the buyer and the seller are considered to be legally dependent each upon the other. The acts are legally considered to be concurrent, as well.
At closing, if the buyer cannot or will not make the payment as described in the sales contract, then will he automatically be in breach of the sales contract? Maybe yes, maybe no.
Since the payment is considered a mutual, concurrent, and dependent action alongside the seller’s duties, the buyer will not be in breach if the buyer refused to pay because the seller has not or will not perform her duties as stipulated in the sales contract.
The seller must be fully conforming with all the duties required of her in the sales contract before the buyer will be in breach for not paying at closing.
For instance, if at closing there is a question of whether or not the seller has clear title to the property, then the buyer need not (and should not) complete the transaction. The buyer may be able, and ready, to close but not willing to do so until the title problems are resolved. See, Harper v. Bronson, 104 Fla. 75, 139 So. 203 (1932).
4. Tender by Buyer Can Place Seller in Breach of Contract
Under the sales contract, if the buyer wishes to place the seller in the legal position of defaulting on the sales agreement, then the buyer has to make a tender of the purchase money first. This isn’t really giving the seller the closing price. The buyer isn’t going to want to pay a seller who isn’t doing what they agreed to do!
Under Florida law, the “tender of money” in this situation is where the buyer demonstrates that he was ready, willing, able, and in good faith to buy the real estate as long as the seller was concurrently ready to meet her duties under the sales agreement. This can be done by the buyer sending a letter to the seller giving the seller notice of the buyer’s tender of money. It’s a big hint to the seller that the buyer may be considering filing that breach of contract action.
If the seller refuses to perform under the contract, an actual tender by the buyer may not be legally required. For instance, if it comes down to closing and the seller has not taken any steps to remove an existing mortgage from the land, then tender will not be needed. See, Walker v. Close, 98 Fla. 1103, 125 So. 521 (1929).
5. Installment Sales of Florida Real Estate
Sometimes, the buyer and seller of Florida real estate agree to an installment plan. Here the buyer isn’t legally required to bring the full agreed-upon sales price to closing nor does the seller have to convey title at that point. Instead, a “contract for deed” is involved, which delineates by its language when the seller has to turn over the deed to the land under the installment sales agreement. Usually, the seller holds onto legal title to the property until all the installment payments have been paid to him.
These are alternative arrangements made instead of the more commonplace sales contract where the deal is (1) the buyer gets title from the seller at closing, and (2) the seller gets a mortgage from the buyer for the purchase price.
Here, it is a mutual and concurrent duty for the buyer to make that last and final installment payment with the seller then transferring to the buyer good title. Both are covenants in the installment agreement under Florida contract law, and the failure to perform their covenant duties here leaves the seller or the buyer vulnerable to being sued for breach of contract.
For instance, if the seller has a duty to provide an abstract of title, then the buyer can legally hold back on making installment payments without being in breach until that abstract is provided by the seller. See, Lake Dorr Land Co. v. Parker, 104 Fla. 378, 140 So. 635 (1932).
Florida Real Estate Lawyer Can Help With Payment Problems in Florida Real Estate Deals
Usually, payment problems generate lots of emotional stress and the anxiety alone may threaten to end a real estate sale — but often, these issues complicating a final sale can be resolved rather smoothly. An experienced Florida real estate lawyer may be able of great help here, working to clear the path efficiently and fast, putting closing back on track.
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