Real Estate Closing: What Is the Closing Process for a Real Estate Transaction in Florida?

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By Gary M. Landau, Esq.

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Real Estate Closing: What Is Closing Process for Real Estate Transaction in Florida? | Call (954) 979-6566

The time between the signing of a real estate contract to buy or sell a Florida home and when the transaction is legally complete can seem confusing to someone not familiar with the process. After all, most of us buy or sell our home only a few times in our entire lives.

Fortunately, the steps involved in a closing are relatively straightforward. And especially if you work with an experienced real estate attorney, the process should go smoothly for everyone involved, whether you are a home buyer, a seller, or someone who is refinancing their mortgage.

The real estate professionals at the Law Office of Gary M. Landau, P.A., have assisted South Florida residents with their real estate transactions for more than 25 years. Here, Coral Springs, Florida-based real estate lawyer Gary M. Landau describes the closing process, along with the legal issues that sometimes arise before a home’s closing.

Funding the Escrow Account

If you’re buying a home, the deposit you gave to the Realtor when you made your now-accepted offer will be placed in the attorney or closing agent’s escrow account. You may need to immediately add additional funds to this account if your signed contract calls for your deposit to total more than the initial deposit.

The attorney holds this money until after the sale closes, at which time it becomes part of the proceeds distributed to the seller.

If there is a dispute about the contract or the deal before closing, the escrow agent may not be able to disburse this money until the dispute is settled, such as by mediation or until a court makes a decision.

Diving into the Docs

If the property is a condominium, under Florida law the buyer has 3 days following receipt of the condominium’s Declaration and all amendments, by-laws, and other documents governing the association to review them.

This is a lot to read, but buyers should comb through these documents with extreme care. Condo docs may exclude pets, longtime visitors (especially those under a certain age for 55+ communities), the ability to have a home business, or more, and buying into the community means agreeing to be governed by these rules.

After reviewing the docs, the buyer can pull out of the deal during these 3 days if they desire.

Performing a Title Search

This is the job of your real estate attorney or closing agent, who will run a real estate title search on the property’s address to ensure that the title is clean–which means the seller has the legal right to convey title to the new buyer and that there are no liens (including from people who did prior work on the home).

If title problems are revealed during this time, the real estate lawyer will work to remedy the issues. Sometimes this can be done quickly, but other times (such as if a probate of one of the prior, now deceased, owners’ estate needs to occur) this can take time.

Getting a Professional Home Inspection, Mortgage, Condo/Homeowners Association Approval

The contract gives buyers certain rights and responsibilities that they must take action on soon after the deal is agreed to.

One is to hire a professional home inspector who can complete their work during the number of days allotted in the contract. This is crucial, because the inspector assess whether the home–including plumbing, electrical, foundation, and roofing–is safe, up to code, and doesn’t have hidden problems that may cost significant money down the road. Buyers are generally allowed to back out of a deal if the inspector turns up unexpected problems, but only during the “inspection period” spelled out in the contract.

If the buyer will be taking a mortgage, applying for a loan with a mortgage broker or bank in a timely manner is also important. Many contracts have a “financing clause” that allows the buyer to back out of a deal if they are unable to get a loan during a certain time period. Past that, the buyer can be obligated to purchase the home, even if that means coming up with the full sale amount in cash.

Timely applications must also be made to a condo or homeowner’s association if the property is governed by these, because approval is required before a closing can occur. Many associations charge a fee for this process.

Preparing and Reviewing All the Closing Documents

All of the financial information regarding the sale, including the price, mortgage, fees, taxes, Realtor commissions and the like are documented on a standard closing document known as an ALTA statement.

Buyers and sellers receive copies of the ALTA prior to a closing. It’s crucial that everyone review the document closely.

Having a Final Walkthrough

Buyers should schedule a final walkthrough on the day of the closing to ensure that the property is in the same state it was when the contract was signed.

If the terms of the deal included repairs the seller needed to make before closing, this should be scrutinized during the walkthrough as well.

Finally, the Closing

The official closing can be done in person or it can be done in advance by mail.

Buyers and/or sellers are asked to sign a number of (often lengthy) documents, which may include:

    • The mortgage loan estimate
    • The initial escrow statement
    • The mortgage note
    • The closing disclosure from the lender (CD)
    • The deed of trust or mortgage document
    • The certificate of occupancy (for new construction homes)

A real estate attorney reviews each document with their client so they understand what they are signing.

A person who is refinancing a home goes through a similar, if truncated, closing process to transfer the home under the new mortgage terms.

Once all the paperwork is signed and the appropriate monies have been received, the buyer is handed the keys and the seller their proceeds, and everyone is thrilled to move on to this new, exciting phase of their life.

Quick Frequently Asked Questions

1. Who legally chooses the closing agent and pays for the title insurance?
In Florida, this is entirely negotiable and is determined by the specific terms of the Purchase and Sale Contract. However, there are local customs:

  • In Palm Beach County, the seller typically pays for the title search and chooses the closing agent.

  • In Broward and Miami-Dade Counties, the buyer typically pays for the title insurance and chooses the closing agent. Regardless of custom, Florida law allows the parties to negotiate these costs. It is important to note that under the Real Estate Settlement Procedures Act (RESPA), a seller cannot require a buyer to use a specific title insurance company as a condition of the sale if the buyer is paying for the policy.

2. What happens if the property is damaged by a hurricane or fire between the contract date and the closing date?
This is governed by the “Risk of Loss” provision in the contract (typically the FAR/BAR contract). In Florida:

  • Minor Damage: If the cost of restoration is less than a certain percentage (usually 1.5%) of the purchase price, the seller is generally required to repair the damage.

  • Major Damage: If the restoration costs exceed that threshold, the buyer can either cancel the contract and receive their deposit back or proceed with the closing and receive a credit or the insurance proceeds from the seller.

3. If I am buying property from a “foreign person,” are there special tax withholding requirements?
Yes. Under the Foreign Investment in Real Property Tax Act (FIRPTA), if the seller is a non-resident alien or a foreign corporation, the buyer is legally responsible for withholding a percentage of the “amount realized” (typically 15% of the purchase price) and remitting it to the IRS. Failure to comply can result in the buyer being held liable for the tax. Your closing attorney will verify the seller’s residency status through a “Non-Foreign Affidavit” to determine if this applies.

4. Can I get a discount on my title insurance if the seller has a recent policy?
Yes. In Florida, you may be eligible for a “Reissue Rate” on title insurance. According to Rule 69O-186.003 of the Florida Administrative Code, if the seller can provide a copy of their prior owner’s title insurance policy and the home was insured within a certain timeframe (typically within the last 3 years for a new policy, or longer for a refinance), the premium for the new policy can be significantly reduced.

5. What happens if the seller passes away after signing the contract but before the closing?
In Florida, a real estate contract is generally binding upon the decedent’s estate. However, the closing will be delayed because a Personal Representative must be appointed by the probate court to sign the deed and transfer the title. If the property was the decedent’s Homestead, the Personal Representative may also need a “Petition to Sell Real Property” approved by the judge to ensure the title is “marketable” for the buyer.

How To Find an Experienced Real Estate Attorney in South Florida

You can search the internet for a “real estate lawyer near me,” but it’s best to ask friends or family for recommendations for an experienced South Florida real estate attorney.

At the Law Office of Gary M. Landau, P.A., we proudly offer buyers, sellers, and homeowners refinancing their homes the peace of mind of an experienced attorney who cares about their clients. The Law Office offers a contract review before it is signed, title insurance, legal representation, and the preparation of all closing documents for a home closing.

Contact Our Real Estate Attorneys at the Law Office of Gary M. Landau, P.A.

With more than 25 years of experience and countless satisfied clients, Gary M. Landau and his team are uniquely positioned to help you with your probate and real estate needs in South Florida. Whether you’re ready to probate a loved one’s estate or to write your own will, or if you are purchasing a home, have inherited a home, or want a closing agent to handle title insurance and all documents for your closing or refinancing, the Law Office of Gary M. Landau is ready to work with you.

Call our office at (954) 979-6566 or complete our online form today to schedule a free consultation. We work with our clients in person, over the phone, or on Zoom.

Copyright © 2022. LAW OFFICE OF GARY M. LANDAU, P.A. All rights reserved.

The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction.

LAW OFFICE OF GARY M. LANDAU, P.A.
7401 Wiles Road, Suite 204
Coral Springs, FL 33067
(954) 979-6566
https://garylandau.com/

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Frequently Asked Questions

A will is the simplest way to ensure that your funds, property and personal things will be distributed after your death the way you want them to. Even if you have very few assets, you will benefit from having a will. About half of all Americans die without a will (known in legal terminology as dying intestate). Without a will to indicate your wishes, the court steps in and distributes your property according to state law. A will ensures that your assets will be given to family members or other beneficiaries you designate.

 

Having a will is doubly important if you have young children. One section of the will allows you to designate a guardian for them in the event of your death. Without a will, the court will appoint a guardian for your children, who may not be the person you desire.

Many Florida residents have out-of-state wills, drawn up while they were still living among the hills of North Carolina or the hubbub of New York. If the will was valid according to your old state’s laws at the time you made it, it is still legal in Florida. However, if you are a Florida resident, you may benefit greatly by having a new will drawn up in Florida, because it will likely be more easily admitted to probate.

 

It is important to know that each state has its own requirements for what makes a will a legally binding document. For example, Florida doesn’t recognize handwritten wills that haven’t been witnessed (known as “holographic wills”), or oral wills not put into writing, even if other states okay them. There’s also the matter of Florida estate law. In this state, for example, your surviving spouse is entitled to 30 percent of your net probate estate, regardless of what you say in your will. The spouse may also have a “Homestead” interest in property you share here, even if you want your house to go to someone else. In fact, all real property owned in Florida will be subject to this state’s laws, even if you’re a snowbird maintaining a residence in the state where your will was drawn up. Other peculiarities also exist, which is why a Florida will could make things much easier for your heirs.

 

If you would like to have me review your current out-of-state will, I am happy to do so without charge. If it turns out to be in accordance with Florida state laws and procedures, you can continue to rely on it. If not, however, your heirs would rather you discover that now.

It is a good idea to re-read your will every few years to be sure it reflects up-to-date realities (you may not want to leave your heirloom to a niece you are no longer speaking to, nor have someone be named your child’s guardian if they have taken seriously ill since you drafted your will). It is especially important to reexamine your will if:

 

  • You have gotten married since it was last drafted;
  • You have made bequests to people who have fallen out of your favor or are no longer living (I recently updated the will of a man who had left everything to his first wife, who was long deceased), or you have not included people who are now dear to you;
  • You would like to change the person named as the personal representative of the estate. (Note: Florida law does not allow a nonresident of the state to serve in this position, unless it is an immediate family member or certain other relatives);
  • You have acquired pricey or sentimental items that are not accounted for in your will. Do note, though, that Florida law allows you to attach a separate personal property memorandum to your will, detailing who will get which specific items. This list can be changed whenever you want.

Perhaps I should answer this question with where not to store it: in a bank’s safety deposit box. Although it may seem logical to put this with your other important papers, it is often difficult for your heirs to gain access to the box once you die, since the box is sealed then and must be opened in the presence of a bank employee.

 

One good option is to leave your original will with the attorney who drafted it, making copies for your personal representative and other important relatives and letting them know who has the original. For my clients who prefer that I store their original will, I keep it in a fireproof will vault in my office, or in the vault in my bank.

 

As an alternative, you could store the will in a fireproof box or vault in your own home.

 

Wherever you store it, be sure to let your personal representative and other close relatives know where you have put it!

Probate is when the court oversees your assets and liabilities after your death. During probate, the court makes sure that your will is valid and acceptable; that all debts, bills, creditor’s claims, and taxes are paid from your estate’s assets; and that your remaining assets are distributed to your beneficiaries according to your will (or, if no will exists, by Florida law).

 

Probate usually does take longer than most beneficiaries would like. But in order to ensure that everyone with a right to a claim is included in the process, the court requires several steps. If the size and complexity of your estate are minimal, however, the entire process of probate can take as little as a few months. Larger estates that are subject to IRS estate taxes or those involving litigation on the part of creditors or heirs generally take longer, often one or more years.

 

To speed the process along for simple and small estates, the courts allow a shortened form of probate, known as “summary administration,” which requires much less paperwork and time.

A personal representative (PR) is a friend or relative, or an attorney or bank, who is put in charge of the estate until all matters regarding the probate are resolved. (In other states, this person is sometimes called an executor or administrator.) The job of the PR includes identifying all assets, searching for creditors and paying valid claims, filing required estate tax returns if the estate is large enough (the figure escalates over time, according to Congressional laws), coordinating with the probate court and attorneys, and overseeing the distribution of assets–all done under the guidance and assistance of a qualified attorney.

 

Serving as a PR is an important role, and such a person should be selected with care as to who is most willing and best able to serve in this position. By Florida law, your personal representative must be over 18 years of age, and be a blood relative, your spouse, the parent or child of your spouse, or a Florida resident.

Generally, no. If you co-own all property via such legal structures as “tenancy by the entirety” or by “joint tenancy with right of survivorship” the property immediately passed to you upon your spouse’s death. Proof of death is usually all that is needed to pass such jointly owned title for cars, stocks, and other personal property to the surviving spouse.

 

But if even one asset was held solely in the deceased person’s name, or any property is owned in the form of a “tenancy in common,” that estate will be required to go through probate. If the assets are limited, the shorter, simpler form of probate is generally all that is required.
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