What Buyers Need to Know
A practical guide to the Florida contract, due-diligence, title and closing process
Buying a home in Florida from out of state is common, particularly in South Florida, and may involve a primary residence, vacation home, or investment property. A buyer may be relocating for work, purchasing a second home, planning for retirement, or acquiring a property that will be used part of the year. The transaction can usually be handled without the buyer being physically present in Florida for every step. The important point is to understand that Florida real estate contracts, title practices, condominium and homeowners’ association requirements, and closing procedures may differ from those in the buyer’s home state.
For an out-of-state buyer, the best time to assemble the Florida transaction team is before the purchase contract is signed. Once a contract becomes effective, important deadlines begin to run. Having a Florida real estate attorney involved early can help the buyer understand the contract, coordinate the closing and title work, and address issues while the buyer still has the contractual ability to do so.
The Florida Purchase Contract Controls the Transaction
A Florida residential purchase is governed first and foremost by the written purchase and sale contract. The contract establishes the purchase price, deposits, financing terms, inspection rights, closing date, allocation of closing expenses, title requirements, default remedies, and numerous other obligations. Out-of-state buyers should not assume that a form used in Florida operates the same way as a contract they have seen elsewhere.
Particular attention should be paid to the inspection or due-diligence provisions, financing contingency, condominium or homeowners’ association provisions, title and survey provisions, and the dates by which the buyer must act. Missing a contractual deadline can materially change a buyer’s rights. For that reason, legal review is most useful before execution, or at minimum immediately after the contract is signed when the contract provides a period in which the buyer may still evaluate the property and transaction.
Inspections and Property Due Diligence Should Reflect Florida Conditions
A general home inspection is an important part of the process, but Florida properties can present issues that deserve particular attention. Depending on the property, its age and location, a buyer may also consider roof, plumbing, electrical, HVAC, mold or moisture, pool, seawall, septic, well, termite or other specialized inspections. Insurance-related inspections, including wind-mitigation or four-point inspections where applicable, may also affect the buyer’s ability to obtain coverage and the cost of that coverage.
Out-of-state buyers should arrange inspections promptly and should review the actual reports rather than relying only on a verbal summary. If an inspection identifies a significant condition, the buyer’s available options will depend on the contract. Those options may include requesting repairs or a credit, obtaining additional evaluations, proceeding with the condition, or exercising a contractual right to terminate when one exists.
Obtain Insurance Information Early
Property insurance can be a significant component of homeownership in Florida. A buyer should contact an insurance professional early enough to determine the availability and estimated cost of coverage for the particular property. This is especially important when the property is older, located near the coast, has an older roof, or presents other characteristics that may affect underwriting.
If the purchase is financed, the lender will require acceptable insurance before funding the loan. Even in a cash purchase, obtaining insurance information during the due-diligence period can help the buyer evaluate the true carrying cost and risk profile of the property before closing.
Title Examination Is More Than Confirming the Seller’s Name
A title search and examination are central parts of a Florida closing. The public records may disclose mortgages, judgments, liens, easements, restrictive covenants, recorded association matters, probate or marital issues, unreleased interests, or other matters affecting title. When an attorney is handling the title and closing work, the attorney reviews the title information, identifies requirements that must be satisfied, and works to resolve title issues before the transaction closes.
An owner’s title insurance policy is designed to protect the buyer against covered title defects and risks after closing. A lender’s title policy protects the lender, not the buyer. This distinction is particularly important for cash purchasers, who do not have a lender requiring a loan policy but still need to decide how their ownership interest will be protected.
Review the Survey and Matters Affecting the Property
A survey can reveal matters that are not apparent from the deed alone, including boundary lines, fences, improvements, encroachments, easements and other physical conditions affecting the property. Buyers should consider obtaining a current survey and having it reviewed in conjunction with the title work.
The importance of a survey increases when the buyer plans to add a pool, fence, addition or other improvement, or when the property has unusual boundaries, waterfront improvements or apparent encroachments. Discovering a survey issue before closing generally gives the parties more options than discovering it after the buyer takes title.
Condominiums and Homeowners’ Associations Require Additional Review
If the home is located in a condominium or homeowners’ association, the buyer should understand the governing documents, assessments, approval requirements and other association-related obligations that apply to the property. Condominium purchases in particular may involve declarations, bylaws, rules, budgets, financial information, structural or reserve information, pending or anticipated assessments, and statutory disclosure or cancellation rights depending on the transaction.
An out-of-state buyer should not view association approval as merely an administrative closing item. Restrictions on leasing, pets, renovations, parking, vehicles and use of the property can directly affect whether the home is suitable for the buyer’s intended purpose.
Decide How Title Will Be Held Before Closing
Buyers should decide in advance how they will take title. A purchaser may acquire property individually, jointly with a spouse or another person, through a trust, or in some circumstances through an entity. The appropriate form of ownership can affect estate planning, creditor considerations, homestead rights, financing and future transfers.
The closing attorney should know the intended vesting early enough to prepare the closing documents correctly. Buyers with estate-planning, tax or asset-protection objectives should coordinate with their applicable legal and tax advisors before selecting a form of ownership rather than waiting until the day of closing.
Buying a Home From Out of State: Closing and Remote Signing
Out-of-state buyers often ask whether they must travel to Florida for closing. In many transactions, documents can be reviewed in advance and appropriate signing arrangements can be coordinated remotely. The exact process depends on the transaction, the documents, the lender if financing is involved, and applicable notarization and execution requirements.
A buyer should confirm the signing procedure well before closing, particularly if documents must be notarized, originals must be returned, or the buyer will be traveling. Wire instructions should always be independently verified through a trusted telephone number because real estate transactions are frequent targets of wire fraud.
Financing Adds Another Set of Deadlines
A financed buyer should begin the loan process promptly and keep the lender informed of the contract dates. Appraisal, underwriting, insurance, condominium review and other lender requirements can take time. A buyer should also understand exactly what the financing contingency requires and when the buyer must provide notice if financing is not approved.
The closing attorney, lender, real estate agent and buyer should communicate throughout the transaction so that title requirements, loan conditions and closing documents are addressed before the scheduled closing date.
Florida Homestead and Tax Considerations May Matter After the Purchase
A buyer who is relocating to Florida and intends to make the property a permanent residence may wish to investigate Florida homestead requirements and applicable property-tax rules after acquiring the property. A second-home or investment-property buyer will have different considerations. Because residency, homestead and tax consequences depend on individual circumstances, buyers should obtain specific advice where those issues are important to the purchase.
A Practical Checklist for an Out-of-State Florida Buyer
- Have the purchase contract reviewed promptly and calendar all deadlines.
- Arrange general and specialized inspections appropriate for the property.
- Obtain insurance information early, rather than waiting until immediately before closing.
- Confirm that title, lien and judgment searches are ordered and reviewed.
- Obtain and review a current survey when appropriate.
- For condominium or HOA property, review the governing documents, assessments and use restrictions.
- Decide how title will be held before the closing documents are prepared.
- Coordinate remote signing and independently verify all wire instructions.
- If financing, track the loan-approval and other financing deadlines closely.
- Conduct a final walk-through and confirm that agreed repairs or other seller obligations have been completed.
Working With a Florida Real Estate Attorney
For an out-of-state buyer, a Florida real estate attorney can serve as a central point of coordination from contract review through closing. The attorney can review the purchase agreement, oversee title and lien matters, coordinate with the lender and real estate professionals, prepare or review closing documents, address issues that arise before closing, and help ensure that the buyer receives the ownership interest contemplated by the contract.
Bales & Bales, P.A. is a Coral Gables, Florida law firm that provides residential and commercial real estate closing, title and settlement services. Our attorneys are involved throughout the transaction and work with buyers, sellers, real estate professionals and lenders to move Florida transactions from contract to closing efficiently.
Contact Bales & Bales, P.A. to discuss your upcoming Florida real estate transaction and learn more about our attorney-led title and settlement services.
This article is for general informational and marketing purposes only and does not constitute legal advice or create an attorney-client relationship. Each real estate transaction presents unique legal and factual circumstances.