For most people, buying a home is one of the biggest milestones in a person’s life. The purchase of a house or condo may be the largest purchase they ever make. Many savvy potential buyers will carefully investigate not only potential neighborhoods and homes, but they will consider other factors like mortgage interest rates, demographics, school districts, commutes, etc.
Some buyers will consider the real estate professionals involved in the process. Real estate agents work on commission: can money be saved by limiting their involvement? Are there other reasons that avoiding a realtor is a good idea for a residential buyer? Does the buyer really need a real estate agent to help them?
There are many things to consider in buying a Florida residence, like learning about the risk of a flood plain and whether or not the home has serious and unrepaired hurricane damage (e.g., mold).
Representation of Home Buyers by Florida Real Estate Professionals
Florida law does not require anyone to shop around and contract with a chosen real estate agent before they buy a home or condo. In fact, many buyers go through the entire residential purchase without having a real estate professional working solely on their behalf.
1. Presumption of Transactional Brokerage
Under Florida Statute 475.278, Florida real estate agents work for both the seller and the buyer in a transaction as a general rule. Legally, this is defined as a “legal presumption.”
The representation itself is called a “transactional brokerage.” It may seem like this arrangement simplifies things, but be warned.
A transaction broker provides a limited form of representation to a buyer, a seller, or both in a real estate transaction but does not represent either in a fiduciary capacity or as a single agent. Florida Statute 475.278(2).
Transactional brokerages limit the legal liability of the real estate professional. If something goes wrong, they have less legal exposure than they would under a distinct and defined contract as a “buyer’s agent.”
For details, read: Are There Dangers with a Florida Real Estate Agent Representing Both Buyer and Seller?
2. Buyer’s Agents
Of course, many home buyers may assume that a real estate agent is working specifically for them, especially when the agent is friendly and hard-working. This is not true. The only time that the agent exclusively represents the best interests of the buyer in a residential sales transaction is when there is a specific contract defining the relationship between the Florida real estate agent and the buyer as one where the real estate agent is a “buyer’s agent.”
Here, there must be a signed contract identifying the real estate agent as working solely for the buyer in a “single agency” arrangement. Florida law mandates that the written contract disclose that the agent works only for the buyer, and that he or she has specific duties as defined by law. These include:
- Dealing honestly and fairly;
- Loyalty;
- Confidentiality;
- Obedience;
- Full disclosure;
- Accounting for all funds;
- Skill, care, and diligence in the transaction;
- Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing; and
- Disclosing all known facts that materially affect the value of residential real property and are not readily observable.
Florida Statute 475.278(3)(a).
In Florida, some real estate agents and entire brokerage firms specialize in representing residential buyers. The National Association of Realtors allows them to earn the distinction of being an NAR Accredited Buyer Representative.
Many will pay rebates to the buyers in the residential sales transaction. For instance, an online list of Florida buyers’ agents offering rebates is provided by Consumer Advocates in American Real Estate.
3. No Agent Representation
Even less legal liability will fall upon the real estate professional if the buyer decides to sign a written agreement that the real estate agent is acting solely as the seller’s agent and not in a transactional relationship with the purchaser.
Buyers are able to sign these agreements, of course. Careful consideration should be undertaken before doing so. In these situations, the buyer will be experienced and educated on Florida real estate market as well as pertinent Florida real estate law.
For more, read: Duty to Disclose for Sellers in Florida Residential Real Estate Transactions – Are Florida Real Estate Buyers Protected by Florida Law?
Representation of Florida Home Buyers: When Lawyers Are Needed
Florida’s foreclosure fraud epidemic in the 2000s has left its permanent impact on the Florida residential housing market. Great bargains are available for Florida homes and condos today, because of our past real estate history.
A buyer who wishes to move forward with limited representation by a real estate agent must understand these nuances. It is very important for this home buyer to know when he needs legal advice regarding the residential purchase and finalizing the deal. Real estate professionals are legally prohibited from dispensing legal advice.
There are several situations where the buyer is wise to consult a lawyer before buying a Florida residence. These include:
1. Short Sales
In a short sale transaction, the lender, seller, and buyer all agree to a sale of the home even though the sales price is less than the total debt secured by the bank’s lien against the residence. The lien holder agrees to take less than the full debt amount in order to get the place sold. Buyers need legal confirmation that the debt has been cleared from the home. See: Are Florida Short Sales a Favorite With Florida Lenders? Florida Sellers Have Great Deals for Buyers – How Florida Short Sale Lawyers Can Help.
2. Foreclosures
Foreclosed homes are the subject matter of a formal civil lawsuit brought by the lender because of the borrower’s default on their mortgage loan. They must be dealt with as being a part of a pending (or purported resolved) judicial proceeding. See our free e-book: A Guide To Foreclosure Fraud.
3. Bank-owned homes (REO)
REO homes are properties where the bank has taken title after obtaining a judgment in a foreclosure lawsuit and is selling the residence as its legal owner. In Florida, special care must be given to make sure that the lender truly is the clear title owner of that property.
4. Residence Is For Sale by Owner
When the home is “for sale by owner,” it is a situation where the owner is operating without a real estate professional’s representation. Consider: 10 Reasons To Have A Home Inspection In South Florida.
5. Residence Comes with Offer of Owner Finance
Sometimes, the owner is willing to finance the purchase in order to get the residence sold; he will still take out a lien on the property just like a bank. Buyers who take on the role of borrower to an individual need to make sure all needed legal protections are in place, because the lending laws applying to financial institutions may not provide the buyer protection against an owner who is providing financing.
6. Lease Option to Buy
Sometimes, an owner will offer a rental property with an option or offer to buy the home after a certain period of time, with a percentage of the rent going toward the purchase price. This may help the purchaser, particularly a first-time buyer, but it is another case of buyer-beware: his rights and protections must be clearly defined in the documentation. What if the renter decides against buying, for instance? What happens then? Can the tenant be forced to purchase the home?
7. Buying a Florida Condominium Unit
In Florida, condominiums are given special treatment under the law because of their unique legalities. These include control of the common areas; defined boundaries between common areas and individual units; the ability of the Condo Board to assess fees upon the condo unit owners; and the power of the Condominium Association to institute foreclosure proceedings against an owner even if that owner is current on their mortgage. See: How Do You Draw the Ownership Line Between Florida Condominium Units and Common Elements?
8. Land Title
In the above situations, it is vital for the buyer to have a lawyer to review how the documents are drafted, particularly insofar as the party identified as the seller or “grantor” in the deal. Florida land title has become a very complicated issue in many residential transactions because of foreclosure fraud.
Anyone purchasing a home or condo in Florida is well advised to take extra precautions to make sure they are buying with full title and clear title before they finalize the transaction. For more, read: Will Florida Title Issues Create Lawsuits for Home Owners for Years to Come? Has Foreclosure Fraud and Robosigning Created a Real Estate Title Mess?
Florida Real Estate Lawyer for Residential Real Estate Buyers
If you are considering buying a home or condominium here in Florida, then having an experienced Florida Real Estate Attorney to help you throughout the process, from searching for potential homes through closing, can be invaluable. For instance, it may be true that most Florida residential sales transactions will have sellers providing standardized forms promulgated by the Florida Realtors and approved by the Florida State Bar. These cookie-cutter documents may not suit the best interests of the buyer in his particular purchase; an experienced real estate attorney will understand when it is best to deviate from the standardized provisions.
For more, read our discussions in:
- 19 Reasons To Hire a Real Estate Lawyer When Buying or Selling Florida Real Estate; and
- Florida Title Company or Real Estate Lawyer: Who Should Handle Your Closing?
Our offices have a free initial consultation for all residential real estate queries. Don’t hesitate to give us a call.
If you found this information helpful, please share this article and bookmark it for your future reference.
