Florida Real Estate Contracts: The Ins and Outs and What You Can Expect
Whether you’ve completed several real estate deals in your investing career or are brand new to the process (in which case, welcome!), nearly any investor can agree on one thing: it can be complex. That’s why we at MyHouseDeals make it our job to bring you all of the essential information you need in an easy and digestible way. One of the things that tends to stump new investors is trying to understand how real estate laws vary from state to state. In order to help with that, we’ve put together this handy-dandy guide breaking down Florida real estate contracts.
Florida Real Estate Law to Consider When Making a Deal
Before we dive into Florida law, let’s discuss what a real estate contract is in the first place. (Please note that this blog post is not meant to cover all laws thoroughly, nor does it offer legal advice, and you should always contact an attorney for your contracts.) Also known as a real estate purchase and sale agreement, a real estate contract specifies the terms and conditions for the sale of (you guessed it) real estate. This contract must be in writing and approved by the Florida Association of Realtors and the Florida bar in order to be legally binding.
You should also be aware of the concept of liens. Liens refer to the security interest that a seller maintains over property even after a sale has taken place. The original seller (lienee) then maintains a right to keep possession of the property until a specified debt has been paid to them by the buyer (lienor). It is vital that you understand how liens work for your specific property as failing to do so may result in the loss of a property which you thought that you already had ownership of.
It is imperative when signing any type of real estate contract that you read and understand all of the key details, which includes topics like the time when you can take possession of the property, the furnishings and fixtures that are included (or not included) as part of the deal, and the title that will be transferred to you as part of the deal. Most importantly, know the costs that you are responsible for covering. This can include, but is not limited to, costs such as survey costs, termite/bug inspections, construction inspection, repair costs, and any broker or lawyer fees. Of course, you also want to be aware of any liens that may be in effect on the property in question.
While Florida state law does not require all deals to be made under the supervision of a Florida lawyer, it may be in your best interest to do so anyway. Be careful to read the fine print and understand the nuance of any contract before signing, particularly if you are not going to be going through a Florida lawyer or title insurance company. You can read more about specific laws here as a starting point. Finally, do your best to be physically present at the closing of a deal if you can, so that you can be wary of any last-minute details.
What Types of Contracts Are Available to Me?
As you probably already suspected, there are multiple types of contracts available to real estate investors in the state of Florida. While there are more types of contracts than what we cover in this blog post, these are some of the most common and the types that we recommend that new investors become familiar with.
The “As-Is” Contract
This is probably the most common type of contract used by Florida real estate investors. This contract is rather self-explanatory as it means that the property is being sold “as-is” and the seller is under no obligation to make any repairs as part of the deal. The seller is not legally obligated to inspect the property in this instance, and the buyer usually has anywhere from 10 to 15 days to inspect the property as part of the deal. Based on the inspection, the buyer can attempt to negotiate a lower price if there is significant damage to the property, but they still buy the property as-is.
Despite the property being sold as-is, this does not mean that the seller is under no legal obligations. Under Florida state law, the seller is obligated to disclose any boundary disputes, environmental hazards, and any kind of infestations occurring within the property.
The FR/BAR Contract
The transaction of this contract is dependent upon contingencies being satisfied before buying. This is one of the simplest and most commonly used contracts as sellers generally just fill in specific information related to the property in blanks on a template contract (see the template section for examples). This contract can be “as-is” if specified by the seller.
Residential Contract for Sale and Purchase
This contract is similar to the others we’ve discussed and functions as its name implies. While most contracts deal with both commercial and residential properties, this type of contract serves only for residential properties. It can be an “as-is” if specified by the seller.
Marketable Title in Florida
Marketable titles are the result of the 1963 Marketable Records Titles Act which was passed by the state of Florida to abolish property claims that were thirty years or older in order to be rid of outdated claims that have no relevance today. What that means is that with marketable titles, the seller is legally obligated to disclose to the buyer that the property in question is free of any liens or defects, including but not limited to inaccurate recording of ownership undiscovered encumbrances, unsatisfied judgments, boundaries, easements, or survey disputes.
Florida Contract Templates
If you’re curious to see what Florida real estate contracts look like, or you’re interested in getting started with one yourself, check out the following links for templates. (Reach out to an attorney for further assistance):
- Pinterest: Just try typing in “Florida Real Estate Contracts,” or any other search term you may be interested in. You’ll get hundreds of examples easily (And while you’re at it, be sure to follow MyHouseDeals.).
What Should My Contract Include?
While the specific terms that should be included in a real estate contract can vary based on the property, these are some basic ones that are mandatory:
- Identification of the parties involved (that is the buyer and the seller)
- Specification of the real property (this should include a basic description of the property and the address)
- Identification of personal property (this includes things like furniture, equipment, etc.)
- Purchase price
- Closing date (this is the date the property will officially switch ownership)
- Signatures from both parties
Additionally, the contract must be in writing in order for it to be considered enforceable in the state of Florida.
It’s no secret that contract law is complex, and often requires assistance from lawyers. By understanding the ins and outs, you will protect yourself and your investment. Itching to get started? Head on over to MyHouseDeals to start finding deals, and consider upgrading to Premium to get early access to the best deals along with exclusive lists of private lenders and cash buyers, wealth-building courses, your own investor website, big vendor discounts, and much more!
Good luck and happy (and profitable) investing!