Buying Real Estate in Florida -- An Overview of the Legal Process

An overview of buying real estate in Florida from making an offer to closing.

MAKING AN OFFER

Owners of real estate may sell their property either with or without the help of a licensed real estate professional ("Realtor"). However, finding and purchasing real estate is generally far easier when Realtors are involved. Once a purchaser and her/his Realtor find acceptable real estate to purchase, the Realtor will assist the purchaser in making an offer to the seller. The offer is typically submitted on a formal contract signed by the purchaser and presented with a deposit. The deposit is usually between 5% and 10% of the offered purchase price, but is often negotiable. If the seller accepts the offer, the seller will sign the formal contract and return it back to the purchaser. The deposit tendered by the purchaser will be placed in an escrow bank account with either the Realtor or the escrow agent.

FORM OF CONTRACT

There are two standard forms of real estate purchase contracts customarily used in Florida, the FAR and the FAR/BAR. Both are designed to be standardized forms and were prepared by the Florida Association of Realtors together with the advice of Florida attorneys. As such, neither form contract is intended to favor or protect one party more than the other in a typical transaction. If a purchaser is not familiar with Florida laws, it is recommended that a real estate attorney either prepare the contract offer or that the purchaser consult an attorney to review the contract prior to submitting the offer to the seller.

PURCHASE LOAN CONTINGENCIES

If the purchaser intends to borrow money to purchase the real estate, the financing section of the contract should be completed. The purchaser must make a good faith effort to obtain from the lender a written commitment to make the loan within the time period specified in the contract (usually not less than 30 days). If the purchaser is unable to obtain a loan commitment within the specified time period, then the purchaser can choose to either purchase the real estate without the loan using his/her own cash, or terminate the contract and receive a refund of the deposit. Termination of the contract is a very technical process; therefore progress of the loan should be carefully monitored so that the financing period does not expire before receiving the loan commitment.

INVESTIGATION OF THE PROPERTY

At the time an offer is made, the seller should provide the purchaser with a thorough written "disclosure statement" that identifies any problems related to the real estate. In addition, the purchaser will have the right to conduct various inspections of the real estate. The purchaser will usually have between ten days and thirty days to complete the inspections. The types of inspections can include the following: (i) the physical condition of buildings and structures (e.g., electrical wiring, plumbing, appliances, roof, etc.), (Ii) termites and other wood-destroying organisms, (iii) boundary surveys and flood zone verification, and (iv) review of homeowner/condominium associate rules and restrictions.

INVESTIGATION OF THE PROPERTY (continued)

The purchaser should have the official public records investigated by a real estate attorney to confirm the seller has clear and legal ownership of the real estate. The attorney will obtain a report of the official public records ("Title Search"), and carefully review it to determine the chain of ownership of the real estate and whether there are any loans, mortgages, or other liens or encumbrances that should be removed in order for the purchaser to obtain clear ownership of the real estate. As part of providing a Title Search, the attorney will also arrange for title insurance for the purchaser which serves as an insurance policy to protect the purchaser/owner from possible hidden title problems, easements, liens, etc. that were not revealed through the Title Search. As stated before, termination of the contract is a very technical process; therefore inspections must be completed quickly so that the seller can be notified of any problems before the the inspection period expires.