What Happens During A Residential Real Estate Transaction

Buying residential real estate may happen only a few times in your life. Because of how infrequently people purchase homes, they may need to remember what occurs during one, which can be an excellent refresher for anyone. Anyone who has gone through the process understands how eager the buyer and seller are to get to the closing table. After accepting an offer, you share this moment with your friends and family. Though transactions differ, considerable work tends to be done before you get to the closing table. 

The components that generally take the most time are the due diligence period and getting final loan approval. Most people are so relieved to get to the closing table that they barely remember what happened. It’s understandable, especially considering how momentous the occasion is. With that in mind, here’s a brief explanation of what can happen when you finally sit at the closing table to get your new home. 

What Happens At the Closing Table  

When you attend a closing, typically, there will be several key people there. Although we included both in the list below, please note that the buyer and seller may choose to sign all the required documentation separately. For example, the seller may sign everything electronically before closing, meaning only the buyer must attend. Whereas everyone listed could be present, that doesn’t mean everyone will be. Still, these are all the people that make a residential real estate transaction possible. 

• The buyer

• The seller

• Real estate agents for both the buyer and seller

• The closing agent (generally an attorney or someone who represents the title company)

• The lender 

• The attorneys for both parties 

• A notary public 

There will be a significant amount of paperwork involved. The types of documents that you are required to sign will differ by transaction, but here are several key ones that you can expect to see:

• Deed

• Mortgage 

• Closing Disclosure 

• Promissory note

• Affidavit of title

• Bill of sale

• Title insurance policy 

• Any relevant disclosures 

After all the paperwork has been signed, the buyer/lender transfers the necessary funds to complete the home sale. Your lender will provide instructions on how this will be achieved before the closing date. Because the title is everything, it must be transferred to the buyer after the funds have been successfully issued.

In addition to the seller getting paid, some of those funds that the buyer/lender provided get distributed to paying off any liens (e.g., the remaining balance of the seller’s mortgage), and the real estate agents are entitled to a percentage of the sale price. One of the best moments is when your real estate agent or attorney informs you that you are “on record.” The deed has been recorded in the county recorder’s office. People enjoy this part because it signifies that a transfer of ownership has occurred and that the public record reflects this. Lastly, you will receive the keys to your home. The rest is up to you.

We’re with You From Contract to Closing
Whether you are a first-time buyer or have purchased multiple investment properties, Spectrum Title Services, LLC, will be with you from the moment you have a signed contract until you discover you are “on record.” We have extensive experience with residential and commercial real estate transactions, refinancing, and title insurance. Contact us to speak with an attorney about any of the aforementioned legal services, and we will be happy to schedule a consultation with you.

How To Protect Your Largest Investment For Free (Part 2)

Last month, we discussed the value and importance of filing for homestead exemption. We looked at it through the lens of property taxes and how much money you could save. However, this series’s title also mentions how you can protect your home, and this month’s article closely examines how the homestead exemption can achieve that. 

Protection from Creditors

As frightening as it may be, imagine a scenario involving a car accident where you are at fault. Because several other cars were involved, you don’t have enough liability insurance to cover other people’s property and medical bills. If you ultimately have a recorded judgment against you, someone could come after your assets and home or have a lien placed against your property. Although this is a fictitious scenario, that doesn’t mean it can’t happen. Ask yourself whether you are protected. Those who have filed for homestead exemptions will likely say that they are. 

The Florida Homestead applies to everything from single-family homes to mobile homes, as long as they are your primary residence. You should also note that your home is protected regardless of its worth, but it limits how much land you can safeguard. It restricts you to your property size up to ½ acre if you live within a city and 160 acres outside of a city. (We will discuss how much it can appreciate in the final section.) 

The homestead exemption does not protect your home if it was bought with funds connected to illegal activity. Mechanics' liens are also not covered because you likely owe someone money for improving the home you are trying to protect. Remember, most people already have liens on their homes because they borrowed money to purchase them. Defaulting on your mortgage or a home equity loan still enables a creditor (lender) to seize it. 

Because the homestead exemption can be applied to condominiums, we must address special assessments and HOA dues. Special assessments on condominiums can be significant, and it isn’t impossible to be told you owe upwards of $10,000 after an HOA meeting where a vote was held. Failing to pay dues or assessments could result in a lien being placed on your home. You are not covered if you file for a homestead exemption after a lien of this nature has been filed.  

Another Area of Consideration

We are emerging from a very hot real estate market, which is accounted for in the homestead exemption. Under our Florida “Save Our Homes” Amendment to the Florida Constitution, your home’s assessed value cannot increase by more than 3% annually. It cannot exceed the inflation rate if it hasn’t reached 3%. When you sell your home, you can carry over the Save Our Homes protection onto your new one. 

Meet with Spectrum Title Services, LLC

When you are ready to buy, sell or refinance your home, contact the trusted team at Spectrum Title Services, LLC. If you have a homestead on your current home, we can explain how you can obtain one on your new purchase to limit your potential tax burden. Contact us today for all residential and commercial real estate closings to schedule your consultation.

How To Protect Your Largest Investment For Free (Part I)

Those buying property in Florida for the first time must understand their opportunity. This two-part series will outline the Florida homestead, how it benefits you, and what you must do to take advantage of it. We aim to convince you why it's important and give you the tools to obtain it. Next month, we will release a blog that breaks down the homestead exemption to give you an even greater command of its benefits. If you missed the March 1st, 2023 deadline to file for your 2023 Homestead Exemption, don’t worry - you can still file for your 2023 Homestead Exemption up until September 18, 2023.  After the late filing deadline of September 18, 2023, you cannot take advantage of your Homestead Exemption until 2024.

What Is a Homestead Exemption?

The tax burden that your home carries is directly related to its value. One of the benefits of the Florida homestead exemption is that you can reduce the taxable value of your home by up to $50,000. (This should not be confused with assessed or just value.) Your home’s value doesn’t decrease to future buyers, but it does in the eyes of the government. In Florida, taxes are assessed by the county’s appraiser and will fluctuate by location. The average cost of a single-family home in Broward County was $282,400—and they pay close to $2,756 in property taxes annually.  

You must understand how the tiered system works to determine how significantly you can reduce your property taxes. (Here’s a pro tip: Remember the number 25.) Suppose your home is worth $100,000 because it is a manageable number to work with. This is how the tiered system works with this home:

• The first $25,000 of your home is exempt from all property taxes. 

• You pay the taxes on the next $25,000

• The next $25,000 applies to the assessed value between $50,000 and $75,000

• The remaining money ($25,000) is taxed fully. 

How Do I Qualify?

This only applies if you own and use the home as your primary residence. You must have lived in the house as of January 1st of that tax year. How this works: when you file for the 2023 tax year, you must have closed on your primary residence on or before December 31, 2022. Additionally, Homestead Exemption applies to properties less than ½ acre, if located within a municipality or 160 acres if outside of a municipality. The best part is that you can do this entirely on your own. For example, if you live here in Broward County, you can file here. For those living elsewhere, simply do a basic search by typing in Your County + Homestead Exemption. You will likely be led to your county’s property appraiser. 

Get in Touch with Spectrum Title Services 

We encourage you to pursue a homestead exemption to reduce your tax burden, and this is something that doesn’t require you to have an attorney. When you need to buy, sell, or refinance residential or commercial property (or a title quote), contact Spectrum Title Services to schedule your consultation. 

COVID-19

Dear Realtors, Clients, and Friends,

Please be aware that the Florida Realtors have just released the Coronavirus (COVID-19) Extension Addendum to Contract. This form was created in response to the global pandemic affecting real estate transactions throughout Florida.  It can be used for the Contract for Residential Sale and Purchase, Residential Contract for Sale and Purchase, Vacant Land Contract, and the Commercial Contract.  This addendum allows for extensions for certain dates and time periods that have not yet passed or expired, which include the following:

·     Closing Date

·     Financing Period

·     Inspection Period

·     Title Cure Period

·     Feasibility Study Period

·     Due Diligence Period

·     Homeowners’/Condominium Association Approval Period

Please understand that these extensions were enacted to alleviate the impacts COVID-19 has on real estate transactions.  Such impacts may include: travel restrictions, governmental or self-imposed isolations, financial institutional closures, recording and governmental closures, title company or law firm closures, inactions by homeowners’ associations or condominium associations, and/or any real estate vendor-related cancellations/closures.  

If you or your client are affected by any office closures or closures that hinder the ability for your transaction to move forward or close on time, it is recommended to come to a mutually agreeable extension period.  

Please note that the “Force Majeure” clause in your contract may not apply to COVID-19 and your contract – so it is important that you read your contract carefully.  For example, the Florida FAR/BAR Contract’s “Force Majeure” clause allows for an extension for up to 7 days after the force majeure event does not prevent performance.  However, it allows either party to cancel the contract if the force majeure event continues for 30 days beyond the closing date.  COVID-19 may not trigger the “Force Majeure” clause to your circumstance – reading the FAR/BAR “Force Majeure” clause specifically, Florida Realtors’ General Counsel Juana Watkins stated in an interview published March 17, 2020: 

When it comes to COVID 19, many of the listed events can be ruled out. This is not a hurricane, a flood, extreme weather, an earthquakes, fire, war, insurrection, or other acts of terrorism. That leaves parties with just two events under the Florida Realtors/ Florida Bar force majeure clause: acts of God or unusual transportation delays. For a party to be protected, those events need to prevent performance or otherwise make it so that services, insurance, or approvals essential to closing are disrupted or delayed. Transportation delays is a self-explanatory concept. This is why those facts you call and give us on the hotline matter greatly. While I am not saying force majeure will never apply, we have yet to hear a set of facts that would likely meet that legal threshold. But remember, things are rapidly changing.

What we can say, is that the party who is trying to avoid liability should do everything in his or her power to perform. The party who seeks to avoid contractual obligations has the burden of showing precisely why they were prevented from performance. For example, fear of a tumultuous stock market future is probably not good enough. Neither is fear of the disease when a closing agent has offered a reasonable way to collect signatures or other solutions to get a deal closed.

On the other hand, if someone has been placed in government-ordered quarantine in a foreign country where required closing services (notary, for example) are not available, this is a much more plausible case to argue for an extension or other method to avoid liability. If, in the future, government offices that record deeds are closed, or if other services related to closing become impossible to procure, this also could become a plausible case for someone to bring up.

The bottom line - please encourage parties to compromise and work together as often as possible. If they are unable to compromise, encourage them to seek legal counsel before attempting to avoid an obligation.[1]

A Link to “Florida Realtors Legal Update on the Coronavirus Pandemic” can be found here:

https://www.floridarealtors.org/news-media/video-library/sharing/florida-realtorsr-legal-update-coronavirus-pandemic

We will continue to monitor any other changes impacting the real estate as they become available.  As of the date and time of this publication, all e-recording counties in the State of Florida are still accepting e-recording documents. Miami Dade County’s Courthouse is closed, but they are still accepting e-recording and mail.  Duval County is experiencing delays with their e-recording. 

Disclaimer: This publication is for informational purposes only and is not intended to be construed as legal advice.  Please note that each situation should be assessed on a case by case basis.  If you or your client have a specific legal question about an issue revolving around this addendum or its impact on your transaction, it is highly recommended that you seek the advice of a licensed Florida Attorney immediately.  You or your client may have continuous contractual obligations that may impact your real estate transaction.

[1]Juana Watkins, Esq., Florida Realtors® Legal Update on the Coronavirus Pandemic, Florida Realtors®, (March 17, 2020) https://www.floridarealtors.org/news-media/video-library/sharing/florida-realtorsr-legal-update-coronavirus-pandemic.