In the spirit of “Back to School,” here are ten basic guidelines for preparing residential real estate contracts and avoiding closing issues:
1. Name the Correct Parties
Check the County Property Appraiser website for the last recorded transfer (typically a Deed) to ensure you are naming the correct Seller. For the Buyer, know if your Buyer intends to take the property as an individual, married couple, trust, or Limited Liability Company.
2. Pay Attention to Contract Timelines and Deadlines
The form FAR/BAR contracts state that time is of the essence. While some referenced dates go to the next business day if they land on a holiday or weekend, others do not. Double-check your contract deadlines.
3. Use the Standardized Form Contracts to Your Benefit
Residential real estate transactions typically are written on FAR/BAR forms. Using the approved FAR/BAR forms prevents unauthorized practice of law by real estate agents. When writing additional provisions, consult attorneys to avoid legal drama with the Florida Bar. And to further the point:
4. Know Your Forms
In the “As-Is” FAR/BAR contract, the Seller is not obligated to close out the open or expired permits prior to the transaction’s closing date. In the “Standard” FAR/BAR form, the Seller is responsible for closing out those permits. This is one of many differences between the two forms, and knowing these differences can save your client’s escrow money in the effect of a dispute.
5. Watch Out for Blank(s) in Your Contract
Section 10(d) of both the Standard and “As Is” Contracts allows for the Buyer to have twenty (20) days to cancel a transaction if the property is unacceptable for lending with respect to flood elevation or public/private flood insurance. This is often much longer than the typical inspection period agreed to by the parties.
6. Always Have Your Client Call to Confirm Wire Instructions
Wire fraud is rampant; a five-minute call to the closing attorney to confirm wire instructions can protect what may be your client’s largest cash transfer in their lifetime.
7. Provide Required Condominium Documentation Early
Buyers of resale Condominiums have a three-day period to review condominium documents. This period does not start until they have received the documentation. Therefore, it is in the Seller’s best interest to provide the documentation early in the transaction.
8. Keep Utilities on Through the Walk-Through
Buyer(s) cannot conduct the walk-through required for closing on the transaction if the Buyer cannot test all the systems in the property for proper functioning.
9. Disclose, Disclose, Disclose
The Seller’s Disclosure is often one of the first documents a Buyer will receive during the transaction. Hiding known, latent defects as a Seller can result in expensive and time-consuming litigation following the closing.
10. Be Prepared
Life happens, and transactions often take time. The period between going under contract and closing can feel like a lifetime, especially for your clients. A prepared agent can walk the client through their unease. And when the unexpected occurs, have a network you can rely on to get through the obstacles.
As always, should you have questions about these guidelines or other real estate matters, we recommend consulting an experienced real estate attorney to protect your clients and their property.