Consumer Pamphlet: Buying a Home
Buying a home may be the biggest investment of your life. To ensure your protection in this important financial transaction, it is critical that you, the prospective buyer, use caution.
Consult with an experienced, Florida-licensed real estate lawyer before you sign a purchase contract. If you need a lawyer and do not know how to find one, the Florida Bar’s statewide service can locate a lawyer for you. You can call this service at 800-342-8011, or visit The Florida Bar Referral Service online.
If you are working with a real estate agent, verify that the agent is properly licensed using the license search option on the on the Florida Department of Business and Professional Regulation website. You may also view the agent’s complaint history, if applicable, through this portal. It is important to review all brokerage documents with your lawyer to understand your agent/broker’s responsibilities to you, and your obligations in the transaction, including any financial obligations you may have to the real estate agent/broker.
The closing agent handling your transaction may be a lawyer, but they may not necessarily represent your personal interest. It is important to understand the role of the closing agent in your transaction.
The Purchase Contract
One of the first documents given to a prospective buyer by a real estate agent or broker is the purchase and sale agreement or contract. This document represents the most important step in purchasing a home, as the details of this agreement dictate the terms of your purchase and such provisions often may not be changed after signing without seller’s approval. The best time to retain a lawyer is before the purchase contract is signed, as it’s much easier for your lawyer to protect your interest at the contract stage. You can also make your offer contingent on lawyer review/approval, but it’s best to have your lawyer review the contract before signing.
There are many different form contracts used in real estate transactions across Florida, but it is important to have the purchase contract prepared/reviewed by your own lawyer before signing to ensure the proper forms are used and the agreement protects your specific interests. Form agreements are negotiable but non-standard terms/unique situations often require specialized language and such drafting should be completed by lawyers where possible.
The law assumes that if you sign and agree to the contract, you have read and understood its terms. The items you should consider discussing with a lawyer when the purchase contract is reviewed include, but are not limited to, the following:
- Does the agreement list the correct property address, legal description, and/or parcel identification number that corresponds to what the buyer is expecting, and does it match what is listed on the deed to the property? What improvements and buildings (including outbuildings) are included in the contract?
- Are the window treatments, fixtures, and appliances included? Which items are excluded?
- What payments are due under the contract and when? What instances could put your deposit at risk? What is a customary deposit under the circumstances?
- When can you take possession? If other than the date of closing, is there an occupancy agreement prepared by a licensed Florida lawyer? Whose responsibility is it to insure the property upon possession? Has the contract been reviewed to provide the protocol that you expect for payment of expenses and allocation of risks?
- Is the seller obligated to furnish you with a good, marketable title? What kind of deed is the seller obligated to provide and how will you take title to the property?
- Who selects the closing agent and who pays for the title insurance for the property in the event the offer is accepted? As a general matter, the party paying is the party choosing, but it’s important to confirm as each contract is different.
- Have utilities been installed and paid for? Are the utilities ready to transfer on the day after the closing date?
- Who is responsible for paying property taxes?
- Should a surveyor be employed to locate the improvements on the property and confirm that there are no encroachments onto or from abutting properties? Who should pay for the cost of the survey? If there are issues that will affect the title, what remedies are listed in the contract? If you are using a mortgage to purchase the home, a survey will likely be required, and for any purchase of a home, including purchases without financing, it is typically recommended that the buyer obtain a survey.
- If a loan is to be obtained from a lender, who will pay the loan closing costs? There are usually local customs as to which costs are paid by the buyer or the seller, but it is better to make this explicit in the contract. If you are obtaining an FHA or VA mortgage, the lender may have restrictions on which party pays which expenses.
- Can you cancel the contract and obtain a refund of the deposits if the buyer is denied a loan, and, if so, under what conditions?
- Should the purchase be contingent on the sale of the property that you currently own? How does this impact your financing?
- What options do you have if the property is uninsurable or the costs to insure the property exceed your budget or impact your loan? Is wind or flood coverage required or recommended?
- Do you have the right to inspect the property including inspecting for mold? When do inspections need to be made? Do you have the right to cancel the contract after inspections?
- If termite damage is found, will the seller have to pay the cost of repairs and treatment?
- If other structural/non-structural repairs are needed, who pays for the repairs? Are there limits to which one must pay if structural damage is found? Does the seller know of any defects? Is the seller required to complete a seller’s disclosure?
- How do you intend to use the property? Are the zoning regulations or other restrictions consistent with that use?
- Are there any environmental concerns that need to be included in your due diligence review? Could the prior use of the property have caused any issues that require professional review?
- Who is responsible for unpermitted work or open or expired permits? Is the seller obligated to disclose this information?
- What is the time within which the offer to purchase should be accepted or refused? Is the date of such acceptance to be vital to the offer?
- Will the process of obtaining clear title, a survey and the mortgage allow you as a buyer to comply with the contractual deadlines?
- Who is the proper party (authorized) to sign and accept the offer to make it binding? If the seller or buyer is a trust or company, who can sign on behalf of such entities?
- Are timber, mineral and water rights, if any, properly covered?
- What are the remedies if the buyer or seller defaults?
- Whose responsibility is it to pay for the real estate broker?
- Whose responsibility is it to pay for governmental special assessments and homeowner or condominium assessments? Does the condominium association have sufficient reserves for future repairs and maintenance?
- Were the appropriate legal disclosures included in the contract, including disclosures related to cooperatives, condominium associations (including disclosures related to a buyer’s right to review a building’s milestone inspection report and structural integrity reserve study, if applicable), homeowner associations, homes built before 1978, radon, Florida-energy efficiency rating, property located in special taxing districts, Foreign Investment in Real Property Tax Act, housing for older persons, and/or properties subject to PACE assessments for energy-efficient/wind-related improvements?