Why an Attorney Should Always Look at Your Florida Real Estate Contract

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By Gary M. Landau, Esq.

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Why Attorney Should Always Look at Your Florida Real Estate Contract | Coral Springs, FL | Call (954) 979-6566

Everyone knows that to buy or sell a home in South Florida, you have to sign a contract. But what most people don’t realize is that each contract is unique. You shouldn’t rush to sign your contract before you’re clear about what you are agreeing to.

When you’re buying or selling your home, you’ll likely be given a form contract from a Realtor, typically with specific filled-in between preprinted clauses. But there is no such thing as a “standard contract,” because which clauses are included and what information is inserted can mean the difference between a smooth closing and one filled with endless litigation.

Each state has a different way of dealing with real estate purchases. In South Florida, it is common for a buyer to actually present their signed contract as their offer. The seller accepts the offer by countersigning the agreement. The problem with this is that now both sides are bound to the contract, which is a legal document. You cannot get out of a signed contract without risking serious financial harm.

Clients sometimes come to me with a contract already signed and executed by both sides. When I explain to them some of the terms they have agreed to, they are shocked. This is why I feel strongly that no one should sign a real estate contract without first having an experienced real estate lawyer look at it and talk them through the terms.

Contract Basics

Whether you’re using a Realtor or buying or selling a property on your own, your real estate contract must have these basic items:

  • Both parties’ names
  • Property address
  • Purchase price
  • How much of a deposit will be given (the higher the amount, the more the buyer can lose if the deal goes south)
  • Fixtures and other items that are included with the home sale
  • Date the sale must be completed
  • And the signatures of everyone involved.

Some contracts will also have an addendum, such as one I like that covers who will pay for any damages from mold, should it be discovered before the deal is closed.

Other Important Contract Terms You Must Pay Attention To

Beyond these terms, a real estate contract has other clauses that someone who is not familiar with them might get tripped up by.

Here are some of the most important issues I regularly encounter:

1. The mortgage contingency

Many of the contracts in use today, including the popular one issued by the Florida Realtors, offer the option to check a box as to whether the deal is contingent on the buyer getting a mortgage. Often, even if the buyer plans to get financing for the deal, this “cash deal” box is checked. This means if the buyers are not able to obtain a mortgage, they are promising to still buy the home for cash, or they will lose their full deposit.

The other option that may be selected is for the buyer to seek financing. Typically, the contract calls for the buyer to begin the mortgage-seeking process within a time period, such as 5 days. That timetable can be negotiated, but once in writing it must be adhered to exactly or, again, the deposit can be lost.

2. The inspection period

Most contracts give the buyer a period to have the home professionally inspected. This is a crucial thing to do because you don’t want to wait until after you close to learn that the home has, say, major electrical problems or a leaky roof.

The length of time the buyer has to inspect the property and to back out of the deal if the report reveals unwanted surprises is written into the contract. Too often, I find the inspection date they agreed to is too short, such as 5 or even 10 business days after the signing. Locating an inspector and arranging for the busy inspector to get to the home, and then waiting for him to write a report and send it to you, takes more days than you think.

I advise buyers to try to as for an inspection clause of 15 business days. That way, there is ample time to get it done, and if the inspection reveals major problems you are able to back out of the deal and have your full deposit refunded.

3. As is a sale

Many homes today are sold “as is.” This means the seller is not obligated to make home repairs that the inspection might uncover. Most sellers don’t want to negotiate this away, but it is another reason why having an adequate length for an inspection period is so important.

Alternatively, a home can be sold with a repair clause. Under these terms, the seller must make repairs up to a certain cost, such as 2 percent of the sale price (or whatever is agreed to in the contract). When a home is sold with a repair clause in the contract, I generally tell buyers to ask for the money for the repairs rather than have the seller do them, since buyers have more incentive to use materials that are long-lasting.

4. Closing cost distributions

Who pays for which closing fees? This is determined by the contract.

Typically in South Florida, the title insurance, which can run hundreds or thousands of dollars, is paid by the seller in Palm Beach County and by the buyer in Coral Springs (unfortunate souls selling in Palm Beach and then buying in Broward get hit twice). But like everything else in a contract, this fee is subject to negotiation, especially if the home’s price is very high so the title insurance is expensive.

Other closing costs are also laid out in a contract and can be subject to negotiation.

5. Outstanding or pending special assessments

Say you live in a condo that issued a 4-year assessment that you’ve been paying out monthly for 2 years. Now you’re selling your home: Who is responsible to pay the remaining balance?

There is no hard and fast rule to this because once again it depends on what was agreed on in the contract. The same holds for who pays a special assessment that might be issued after the contract is signed but before the parties have closed the sale.

Real Estate Attorney Coral Springs

Have the Law Office of Gary M. Landau by your side. The Law Office of Gary Landau is located in Coral Springs, Florida, and is rated 10 out of 10 by the legal website AVVO. For more information or free phone consultation, call 954-979-6566 or email us. Attorney Gary Landau personally returns all calls to him.

Law Office of Gary M. Landau P.A.
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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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