Buying a home or a condominium may be the largest single investment of one’s lifetime, and consequently, it is important that you as the prospective buyer use the utmost caution to be sure that everything is in order. We therefore recommend that you consult with your attorney before signing any documents.
- The Purchase and Sale Agreement -This is an extremely important document, and it should not be signed until after it is carefully reviewed with your attorney. This document provides what is included in the purchase, the payment details, whether a mortgage contingency is part of the agreement, when possession can be taken, the responsibilities of the parties with respect to the title, surveys, repairs, inspections, taxes, brokerage, assessments, documents to be provided and a host of other matters. The negotiation of all of these details should take place before the Purchase and Sale Agreement is executed, not afterwards.
- Marketable Record Title - The Purchase and Sale Agreement should provide that the seller will convey marketable record title. This means that proper evidence of ownership by the seller is contained in designated public records, and that the seller has the right to convey the entire title to the property being sold. This requires a investigation conducted by your attorney.
- Warranty Deed - A deed represents a conveyance of title to the property, which is recorded in the public records to evidence the transfer to the buyer. If the deed is a warranty deed, it includes warranties, such as (1) that there is good title; (2) that there are no encumbrances other than listed exceptions; and (3) that the buyer will have possession of the property against any others. However, these warranties are only provided by the seller, and this is not a substitute for a complete title examination to determine if there are title defects. Title insurance by a reputable title insurance company should be obtained to insure against these defects.
- Liens - As part of the title investigation, your attorney will need to check if there are outstanding judgment liens, whether prior permits have been closed, and various other matters. If there have been recent repairs, or if the property has been under construction, liens may have been filed under the Florida Mechanics' and Material-men's Lien Law to insure that building costs have been paid. In order to pass clean title, all liens should be satisfied, all permits should be closed, and all assessments paid. In short, there should be no encumbrances on the title that are passed to the buyer. In addition, if the seller has any existing mortgages on the property, these mortgages must also be satisfied as part of the closing process.
- Joint Ownership with Rights of Survivorship - Title can be placed in various forms, depending on the needs and desires of the buyer, as would be explained by your attorney. Many buyers have title placed in Joint Tenancy, which provides that title would pass automatically to the survivor when one of the joint owners dies. When property is owned by a husband and wife in joint tenancy, this is known in Florida as “Tenancy by the Entirety”. This form of ownership has many benefits, but depending upon estate planning, taxes, and other matters, there may be other ownership formats which are more beneficial, depending upon the circumstances. In addition, joint ownership among various parties may lead to other issues, such as who is responsible for the mortgage, taxes, repairs, maintenance, and various other matters.
- Financing the Property - Many home and condominium buyers require financing in order to pay for the purchase, and the Purchase and Sale Agreement should contain a contingency clause to insure that if the buyer is unable to obtain financing, that the buyer would be able to receive the deposit money back and the purchase would then be terminated. There are many forms of financing available, including variable rate mortgages, conventional mortgages, government insured VA and FHA loans, as well as specialized mortgages designed for specific financial institutions. The lender in each instance will present the buyer with a loan document package which includes many terms which should be reviewed with your attorney beforehand. These include prepayment penalties, limitation on the right to sell without lender's consent, insurance requirements, tax and insurance escrow payments, collateral rights to borrow from another source, limitations on the use of the property, interest rate changes, assumption fees, service charges, appraisal fees, escrow fees, lender attorney's fees, and various other terms. Also, once the mortgage note is signed, the buyer/borrower is responsible for the total indebtedness, and if there is a subsequent assumption of the mortgage, the lender may not release the original buyer/borrower from the responsibility to pay the entire debt.
- The Closing - Your attorney, together with your mortgage lender, should carefully draft the documents required to conform to the actual intent of the parties, and the technical requirements, including insuring title and recording documents. In the usual instance, your attorney should be present at the closing to insure that each detail is properly covered, and that you as the buyer are aware of each aspect of the transaction.
Florida Real Estate Transfer fees (i.e., Documentary Stamps) - In typical sales, buyers of Broward and Palm Beach County properties pay the state 70 cents per $100 of the purchase price. In Miami-Dade, the fee is 60 cents per $100 for single-family homes and $1.05 per $100 for other properties.
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