Buying or Selling a Home
Transaction Participants and Basics
- Experts - you should always surround yourself with experts to protect you. A home may be the largest asset you will ever own. Your team of experts should include a real estate attorney, real estate agent, finance source, inspector, appraiser, surveyor, and closing agent.
- Real estate attorney - the attorney can help you through all aspects of the transaction from contract through closing, including title services. Hiring a real estate attorney will ensure that all of your rights are protected and that the process goes smoothly.
- Real estate agent - will help you buy or sell your property by means of marketing, the contract, and various other means of the transaction.
- Finance source - this is a bank or mortgage broker or other source of financing the purchase of the property.
- Inspector - an objective expert who will examine the property for the buyer or seller to determine the condition of the improvements before the property is sold. Sometimes hiring a specialized inspector, such as a roofing inspector or septic inspector, is a good idea.
- Appraiser - typically employed by the lender on your behalf. His/her job is to value the property based upon other comparable properties that have recently been sold to ascertain its market value.
- Surveyor - the surveyor will provide a boundary survey of the property and improvements, to ascertain what exactly you are selling or buying and precisely where everything is located on the property. They will also identify any easements or potential encroachments on the property. The surveyor is typically employed by the lender or your attorney on your behalf.
- Insurance agent - most lenders require proof of insurance on the property you are purchasing. Be sure to have this in place early, especially during Hurricane Season!
- Closing agent - is the real estate attorney or designated paralegal who handles the closing documents, title insurance, and transfer of funds and recording of all the documents which transfer the property from the seller to the buyer.
- The Seller, the Buyer, the Lender/s (mortgage holder), and any other interested parties such as leaseholders, lienholders, prior mortgage holders, homeowner association, developer, etcetera.
- The Real Estate Contract - The real estate contract is a binding legal document that is in writing and has many standard paragraphs which deal with the conveyance of real estate in Florida. The contract should be prepared by a professional who has experience in real estate transactions and who is looking out for your best interests. Typically, the contract is drafted by your real estate attorney or the real estate agent. The document should include all of the specific details of the transaction, because anything not specified in the contract will probably not be included in the transaction. Some very important elements of the contract are below.
- Names (and titles) of all parties;
- Legal description of property to be purchased;
- Purchase price and deposit amount;
- Closing date;
- Who pays for various closing/title/transaction charges
- Real estate agent’s commission;
- Any other particulars of transaction;
- Due Diligence - Typically there is a short period of time, as designated in the contract, in which you can investigate the property to determine if it is a reasonable purchase. Your attorney can help you with this investigation. This is a critical part of the transaction. Some of this investigation includes, but is not limited to the following: survey, home inspections, termite inspection, title issues, easements, encroachments, home owner’s association approvals and fees, taxes, and permits.
- Closing
- What should you bring?
- Buyers should bring a cashier’s check for the full amount you are bring to the closing as identified in the closing statement (HUD-1). Make sure of the amount ahead of time.
- All parties should bring picture identification, such as a driver’s license.
- All parties to the transaction must be at the closing, unless arrangements for a mail-away are made.
- What occurs at the closing?
- The property transfers from the seller to the buyer for the amount of money identified as the purchase price.
- All requirements identified in the Commitment of Title Insurance issued for the benefit of the Buyer and Lender, have been satisfied.
- The closing agent prepares a closing statement, also called a HUD-1, before the closing for review and approval by all parties to the transaction. If approved, the settlement statement is finalized and signed by all parties at the closing. The closing statement identifies how all of the money is disbursed.
- A property deed is prepared, signed, and sent to be recorded in the Public Records to accomplish the property title transfer.
- The financing documents (mortgage, note, riders, truth-in-lending, etc.) are signed and the mortgage is sent to be recorded.
- The closing agent (attorney) receives, verifies, and disburses all the funds of the transaction. All of the costs of the transaction are paid. The real estate agent’s fees are paid.
- Previous mortgages, equity lines, and other liens are paid-off.
- The keys are handed over to the new owners.
- A copy of all of the necessary documents are provided to the buyer, seller, and lender by the closing agent.
- What happens after closing?
- Title Insurance - a final title insurance policy will be issued for the property (one for the buyer and one for the lender) once the deed has been recorded and a search is done for the gap or time between the closing and the date the deed is recorded. The final title policy will be sent to the party obtaining the insurance by the closing agent. It is important to keep this title insurance policy in a secure location along with your other title documents.
- The original recorded deed is returned to buyer and the original recorded mortgage is returned to the lender.
- A satisfaction of any previous mortgage/s or liens is recorded and sent to the seller.
- What should you bring?
This information is not intended as a conclusive explanation of the Law of Real Estate Transactions in Florida. It is to be considered only a summary for clients or prospective clients of this law firm. If you have any questions concerning a specific real estate transaction, you should consult an attorney experienced in the practice of real estate law.