What Happens If You Were Planning to Close on a New Home When Hurricane Irma Struck?

Hurricane Irma is gone, but the effects of her wrath are still being felt all over South Florida. One group impacted are people who have an active contract to buy or sell their home.

Even if your closing date was initially a few days before Irma hit, you no doubt found that it was impossible to get homeowner’s insurance. So if you were taking a mortgage, you couldn’t close. That’s because insurance companies freeze new policies once a storm takes aim.

Now that the storm has passed, you’ll need to take certain steps to move forward with the deal.

1) Get a written extension of the contract closing date, if necessary. The standard real estate contract provides for a short delay for after things return to normal, a clause known as “force majeure.” If the delay will last for more than 30 days, either the buyer or seller can cancel the contract without incurring any financial penalties. If you’re still interested in preserving the deal but think the delay in your closing date may be significant, you’ll want your Realtor or attorney to get all sides to agree in writing to extend the date.

2) Have a new, professional inspection. You’ll need to wait for power and water to come back on before you can have the home re-inspected. It’s something that every buyer should absolutely do. Even if the original inspection took place the week before the storm, you’ll want to have it repeated, because the home is obviously at risk for being in a different condition now. (If you’re taking a mortgage, your lender will require that one is done.)

3) Determine who pays for repairs. In many contracts, the seller must return the house to the condition it in when the buyer signed the contract. But sometimes, it’s the buyer who has to pay. You’ll want your lawyer to check out the “risk of loss” section of your contract and let you know who is responsible.

4) Renegotiate if necessary. If the home has been changed by the storm, you may need to renegotiate the price of the sale. However, the house must be in habitable condition before any lender will agree to a mortgage.

5) Stay in touch with your lender. According to local media, many lenders seem to be honoring their interest-rate guarantees that technically expired when your closing date got moved. Still, you’ll want to contact your mortgage broker or lender to see specifically how the storm affected the terms of your loan.

If you would like to speak with an experienced real estate attorney, contact the Law Office of Gary Landau for a FREE legal consultation at 954-979-6566 or by email. Attorney Gary Landau personally returns all calls and emails to him.

How To Have A Smooth Real Estate Closing When You’re the Seller

Sellers of real estate property often think their work is finished when the contract is signed. But until you’ve handed over the keys, and your closing attorney has handed over the deed, there are still things you need to focus on:

How To Have A Smooth Real Estate Closing When You’re the Seller1)   Title issues. If your closing agent/attorney turns up any problems, or “clouds” on your title, they will work to resolve it with your help. Maybe you forgot to get a permit closed for work you did a long time ago, or maybe there was a mistake when you added a relative to the deed. While these clouds can be cleaned up by a qualified attorney, there may be steps they need you to take, which you must do right away.

2)   Repairs.  If you haven’t maintained your house over the years, you might want to consider having your own professional inspection done before you list the home, then fix the problems that are detected, so they won’t cause problems later. If you haven’t done this, and your buyer’s inspection turns up trouble (assuming you are not selling the home “as is”), you’ll need to ensure those repairs as completed as soon as possible.

3)   Condition of the property. When you sign a contract, the buyer is agreeing to buy the home in the same condition they saw it. During the period between contract signing and closing date, it’s important for the seller to maintain the property, and to repair anything that breaks during this time. After you move out and before the buyer has a walk-through, be sure to thoroughly clean your soon-to-be-ex home inside and out.

4)   Closing documents. When you get the documents before the closing, you’ll need to review them as closely and as quickly as possible to make sure all the figures are correct. If you have any questions, ask your attorney to explain. That way, when you get to the closing, the final steps will also be as smooth as possible, and you’ll soon be on your way to your next adventure.

Sometimes sellers in South Florida think they do not need an attorney. My years of experience shows hiring an attorney is always a cost-effective move, because having a professional not only doing the seller’s documents but also representing your interests can save you time, headache, and, most important, money. Problems that turn up on the seller’s side after the contract’s signing can sometimes even kill the deal if they are not handled quickly and professionally.

For more on the steps buyers should take after the contract signing, see my prior blog.

Having the Law Offices of Gary M. Landau by your side during each step in a real estate deal helps insure that the process goes smoothly. For more information about your real estate contract in South Florida, call 954-979-6566 or email for a free consultation.

What an Attorney Does That a Title Company Doesn’t

attorney vs title companyYou’re about to purchase a new home or sell your old one, and you wonder whether you need an attorney or can “get away” using only a title company (as your Realtor may tell you). For little to no extra cost and much peace of mind, using an attorney to handle your closing usually makes a lot more sense.

For most people, the home is the most expensive asset you own. If you were buying or selling a business for the same price, you wouldn’t think twice about hiring an attorney. In real estate transactions, it makes even more sense to bring in a lawyer because in many cases the title company’s fee may not be any lower.

What you get when you hire an attorney over a title company is someone who not only handles the paperwork for your closing, but who also looks out for your legal interests. A title problem pops up during the process? An attorney can quickly clear it up. Get into a dispute about what furniture the seller is supposed to leave behind? An attorney can interpret the contract to see what you’re entitled to, then help you enforce your rights. See charges on your closing disclosure form you wonder about? An attorney carefully evaluates all charges to make sure you are legally bound to pay them—important because people often try to slip in extra fees hoping you won’t notice.

If you are buying a house in Broward County or selling one in Palm Beach County (the customs differ), you are generally the one who chooses the title insurance provider/closing agent. If you select an attorney, you get legal representation for a price similar to a title company’s, which doesn’t come with that representation. Attorneys also tend to be more thorough; I have been involved in many deals where the title company doesn’t do a complete city lien search, for example, claiming that is outside the scope of their job. This means if the home has outstanding permits, you may not know it until after you close.

What’s more, I have saved clients hundreds or thousands of dollars because I contested charges they did not legally have to pay. So even if the other side chose the closing agent and they hired me additionally, the savings often more than paid my fee.

In the state of Florida, the convention is to present an offer in the form of a signed contract. Here again, involving an attorney makes smart business sense. For a client that plans to hire a lawyer as their closing agent, many attorneys will review the initial contract for no extra fee. To keep that contract from being binding before the lawyer sees it, be sure to write “subject to attorney’s review within three business days” into the contract you are presenting as your offer. Then get it to an attorney right away, so he or she can be sure you are well protected.

Contact the Law Office of Gary M. Landau for a free estimate the next time you find yourself buying or selling your home.

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The New Form You’ll Find at Your Next Closing

If you last bought or sold your property more than 8 months ago, you may be surprised the next time you’re at a real estate closing. That’s because last October, the longstanding HUD-1 closing form was replaced by something called a Closing Disclosure, or CD.

The new form is part of a larger revamp brought about by the Federal government’s overhaul of the way mortgages are processed and disclosed to borrowers. The CD has all the same information as the old HUD, but it’s presented in a new way, and, importantly, much additional information is provided. Although the new form may seem confusing to people used to the old one, there actually are some good changes.

Here are some of the biggest differences:

  1. You’ll get the closing disclosure no less than 3 days before the closing. Before, banks typically released figures to the closing agent at the last minute, so buyers and sellers often didn’t see the HUD until just before closing. Now, the law requires each party to get and sign a CD at least 3 days ahead of time. While this is a good thing in most cases (you have time to go over the form with your attorney/closing agent), one kink is that some changes that are made trigger an additional 3-day period. So if you found, say, during your walk-through that the air conditioner is shot and the seller agrees to give you money for a new one, you may not be able to close later that day.
  2. Terms of the loan are spelled out clearly. Unlike the 2-page HUD, the CD is a 5-page form, with many of the new lines filled with specific information about your loan, such as the exact monthly principal and interest, and whether there’s a prepayment penalty or balloon payment expected. This information must match the numbers given to you by your bank earlier in the loan process.
  3. Costs are itemized in detail. Under older versions of the HUD, banks sometimes lumped various fees together. Now, they must itemize each one in detail, including how much they’re charging for underwriting, and even for determining whether you’re in a flood zone. Costs from other vendors are also listed one-by-one, ranging from the charge to record your deed to what you’re paying for a home inspection.
  4. Who pays what is a bit confusing. One complaint of the new form is which costs are to be paid by the seller and which by the buyer isn’t always straightforward. In some cases a payment by the seller that’s credited to the buyer looks like a charge the buyer must pay. Talk to your attorney/closing agent if your payments seem unclear.
  5. The last page provides other helpful information.  In addition to summarizing your loan (including the total amount you’ll pay in interest over its life), other useful information is listed, such as whether, in the unfortunate event of a foreclosure, your state protects you from liability for any unpaid balance. Finally, the page handily lists the names and contact information for each professional involved in the deal, from the lender and mortgage broker to the Realtor and closing agent, so you can more easily get your questions answered.

If you’re buying or selling in South Florida and want a free consultation with an attorney, contact us at The Law Office of Gary M. Landau, P.A.

Big changes coming to real estate closings October 3

Thanks to regulations stemming from the Dodd-Frank legislation, big changes are coming to residential real estate closings on deals initiated after October 3rd. The changes affect everyone from clients to banks to closing agents and Realtors.

The biggest changes buyers and sellers will notice include:

  1. Buyers taking a mortgage will now receive a “closing disclosure” from the lender at least three days before the closing. This disclosure will include accurate closing fees and other expenses buyers will be expected to pay.
  1. There will no longer be a “HUD statement” to describe all settlement figures. Instead, two separate closing statements will be generated, one for the seller and a separate one for the buyer (said to better protect financial privacy).
  1. Closing statements, along with a bank’s closing disclosure, must now be sent to the buyer at least three business days before a closing. This will give buyers time to comb through all the information before coming to the closing.
  1. During a closing, buyers and sellers will no longer be permitted to be in the same room at the same time. (Again, this is thought to better protect financial privacy for each party.)
  1. Because lenders will need to complete closing statements earlier, among other reasons, they will need to get details about the deal, such as maintenance figures, earlier than previously required.
  1. Even private lenders, such as friends or relatives, are affected by this law. In some cases, they will need to adhere to the same timetables and rules as regular banks.