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Buying a House in Florida (FL)

 

Buying a house is one of the most important legal transactions you'll ever undertake. It's exciting, and you can keep the stress level to a minimum if you take time to learn about your legal rights and how the home buying process works in Florida. First-time home buyers and repeat buyers need to be informed.

Working with a Real Estate Agent

Like most home buyers, you'll probably work with a real estate broker or salesperson (agent) to find your new home. A license is needed for someone to participate in a real estate transaction. Generally, this is a broker, with sales associates working under a managing or sponsoring broker's authority. In Florida, real estate agents enter into a contract representing either the buyer or seller as a "single agent." If both parties are represented, the agent is a transaction broker, and has limited duties to the parties. When you contact a real estate professional, she'll provide a consumer disclosure explaining all roles. Ask questions if you don't understand. You can contract for a "buyer's agent" who will represent your interests.

Real estate agents have what's called a "fiduciary duty" to the party they're representing. They are held by law to owe specific duties to that person. These duties are described in your brokerage agreement, listing agreement or other contract, and also include:

                               Providing services honestly and in good faith

                               Using reasonable care and skill

                               Keeping information confidential, except for public information, where authorized by the buyer, or required by law

                               Promptly presenting offers to sellers

                               Answering your questions completely and accurately

 

Finding a Home

Property Disclosure

Looking at a home involves more than finding one appealing to your eye. Overall condition is important. When you visit homes for sale, sellers should disclose of all important facts they actually know about the home's defects affecting health and safety. It doesn't matter if disclosure affects whether the property will sell, or the ultimate sales price paid. If you ask about problems, the seller needs to answer truthfully. Ask if a property has any of these common defects:

                Plumbing and sewage

                Water leakage of any type, including in basements

                Termites or other insect infestations

                Roof defects

                Heating or air conditioning system problems

                Property drainage problems

                Foundation instabilities or cracks

                Title issues

                Lead paint (required under the federal Residential Lead-Based Paint Hazard Reduction Act of 1992)

Purchase Agreements

When you find a house you'd like to buy, you'll put together and sign a purchase and sale agreement , which contains all of the terms of the sale, including:

                Sellers' and purchasers' names and addresses

                Purchase price and down payment

                Financing arrangements

                The property's legal description

                Requirement for good and marketable title

                Property condition

                Closing and possession dates

                Statement of settlement costs

                Condition for who bears the risk if the property is damaged before closing

                Property liens

Consult your Florida real estate attorney before you sign the contract. An experienced real estate attorney can help identify issues and find solutions to any problems that come up.

Inspection

Your purchase agreement should allow you to have a home inspection. The contract can be contingent on resolving issues the inspector finds. A home inspector visually examines a home's major structural, mechanical, plumbing and electrical systems.

As a buyer, it's best to pay for the inspection yourself, ensuring the inspector is looking out for your interests. Your attorney can help you review the inspection report and negotiate with the seller for repairs or money for repairs.

Legal Title Issues

When you buy a house, you also buy title insurance. A title search is a review of public records, looking for any problems with the title's validity before closing. The policy insures against loss due to certain title defects that didn't turn up during the title search. Your real estate lawyer or title company investigates the legal title of the property you want to buy, and may find issues you'll need to understand.

Typical title issues relate to easements and liens. An easement is a right to use property, such as a utility easement. Liens are a charge against a property to satisfy the current owner's debt. Tax liens, mechanics' liens and mortgages are examples. You usually won't want your new home to be subject to the seller's unpaid liens. The title search serves to reveal whether there are possible title problems. Your lawyer can help you assess and solve these problems so you can complete your purchase and enjoy your new home without worry.

Closing the Purchase

The closing or settlement is the transaction's completion. All documents are signed, you take title to your new home, and the seller collects the purchase money. Your house buy is done and you get the keys!

Closing Costs

In Florida, you can expect to pay for the following charges - called "closing costs" - when buy your home:

                Discount points

                Appraisal fee

                Credit report fee

                Lender's inspection fee

                Mortgage insurance application fee

                Assumption fee

                Mortgage broker fee

                Tax service fee

                Document preparation fee

                Underwriting fee to mortgage lender

                Accrued interest

                Mortgage insurance premium

                Hazard insurance premium

                Flood insurance

                Escrow account deposits

                Title charges

                Recording fee

                Surveyor's fee

                Pest and other inspections

 

The real estate brokers or agents are paid at closing; the seller typically pays the sales commissions. Closing costs can be negotiated.

RESPA

A key federal law, the Real Estate Settlement Procedures Act (RESPA), ensures equity and efficiency in home sales. The law applies to almost all mortgage loans and mortgage companies, not just FHA-insured mortgages. The US Department of Housing and Urban Development (HUD) administers the law.

RESPA requires consumer disclosures that prevent unethical lending practices and empower consumers to understand and make informed decisions when choosing closing services. The law helps you avoid surprises, like an unexpected fee at closing. Certain disclosures are required at the time of loan application, before closing occurs, at closing and after closing.

Mortgage Basics

What Is a Mortgage?

At the time of your home purchase, you'll sign a promissory note. This is your legal obligation to pay back your home purchase loan. A promissory note is, in effect, an "IOU." You promise to pay your lender the full amount, payable in equal monthly installments, at the interest rate previously agreed upon. Your lender keeps the original until you completely pay off the loan.

In Florida, the document you sign as a security interest in your house is called a mortgage. A mortgage is the instrument (a contract), usually held by the lender, naming your home as loan collateral. Shop carefully for your mortgage, as terms and conditions vary greatly.

Private Mortgage Insurance

If you put down less than 20 percent on a home mortgage, lenders usually require you to have "private mortgage insurance" (PMI). PMI protects the lender if you default on the loan, which is a risk when the down payment is small. PMI covers the gap if a foreclosure sale of your home doesn't bring enough money to pay off your mortgage plus foreclosure costs. PMI premiums are usually added to your monthly payment and the loan servicer pays the insurer.

The Homeowners Protection Act of 1998 (HPA) establishes rules for automatic termination and borrower cancellation of PMI on home mortgages. Under HPA, you have the right to request cancellation of PMI when you pay down your mortgage to the point that it equals 80 percent of the original purchase price or appraised value.

Search for your new home and complete your purchase with confidence, along with the help of a real estate law attorney in your area.

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