Frequently Asked Questions and Answers:

REAL ESTATE

What are real estate closings?
A real estate closing is the transaction that occurs when a buyer and seller entered into a contract for sale or purchase of real estate, either residential or commercial real property. The foundation of the transaction – the purchase and sales agreement – outlines all aspects of the transaction such as price, responsibilities and liabilities, if any, of the parties, and includes important dates for the closing. Closing a purchase and sale of real estate can be very complicated, and involves a number of parties such as a mortgage lender, title agency, real estate broker(s) and real estate attorney(s).

Do I need a Florida real estate attorney to represent me at closing?
Only a licensed Florida real estate attorney can offer you legal advice throughout the transaction – from the moment you sign the contract to the date of closing when the property is transferred to the buyer from the seller. While Florida law does not require the parties to be represented by an attorney, hiring an experienced lawyer will expedite the closing process and protect your interest, as buyer or seller, throughout the transaction. Your Florida real estate attorney will represent you by negotiating the terms of the contract, preparing all closing documents, and communicating with all parties involved throughout the closing to ensure that the closing occurs without any delay, interruption or additional expense.

The purchase and sale of real property is one of the greatest transactions you may face in your lifetime. The cost of hiring a Florida real estate lawyer to guide the buyer or seller throughout the process, defend their interests, and assist in negotiations, is a negligible cost in the transaction. Your real estate attorney will protect you and provide peace of mind against many of the risks associated with a real estate closing.

What costs are associated with real estate closings and who pays?
All costs associated with the real estate closing will be presented in the closing disclosure. In Florida, closing costs are customarily (but not always) divided between the buyer and the seller. Examples of the buyer’s closing costs are as follows: property survey, professional appraisal of the property, property inspection, documentary stamps, and mortgage loan fee and recording fee. When you obtain a mortgage for the property as buyer, you will be required to pay the fees of the lender. Examples of a seller’s closing costs are as follows: municipal lien and tax search; title search; document preparation; and mortgage payoff subject to the loan balance for the seller. Some costs may be outlined by the purchase and sale agreement, such as the real estate agent’s commission, the owner’s title insurance policy and endorsements to the title insurance policy. All expenses associated with the closing will be set forth in the settlement statement (also known as a closing statement) – your lawyer will review each item on this document with you prior to the closing.

What does the title insurance company do during the real estate closing?
The title insurance company is another party heavily involved in the Florida real estate closing. The company is an independent entity in the transaction, and does not represent any of the parties. The title insurance company will research the real property at issue to review past ownership of the property – this search will certify that the seller of the real property has the legal right to transfer the property to the buyer. Your experienced Florida real estate attorney will examine the applicable title information to determine who owns the land, if there are any defects in the ownership and if there is any need for action to secure good title for the closing.

It is important to understand that the title insurance company does not provide any sort of legal advice as to the transaction, and more importantly, it cannot represent you as the buyer or seller in the event that an issue arises during the closing, such as a problem with the title search. In fact, a title insurance company may not have any Florida real estate attorneys on staff. Therefore, it is critical to retain an experienced Florida real estate attorney to represent you as buyer or seller because the title insurance company will not serve as your legal representative.

What is title insurance?
A Florida real estate attorney can enhance the title examination by issuing or obtaining an owner’s policy of title insurance for you. This is issued to the buyer and the title policy is issued by the title insurance company and provides coverage to the property owner for any financial loss if there is a defect in title. The buyer will consult with his or her real estate attorney to discuss what protections are provided by this policy and the importance of securing title insurance.

Do I need title insurance?
There are two types of basic insurance protection – one for the mortgage lender and one for real estate owners. When you purchase real estate, you want to ensure that the property is yours. The mortgage title insurance policy does not protect you as the owner. Therefore, you need an owner’s title insurance policy to protect your real estate investment. In the absence of title insurance, you may be at risk of losing your investment due to title defects. Title insurance can safeguard your real estate investment. Following the purchase of real estate, title insurance provides a permanent assurance that your ownership and use will be defended by the insurance company against any claims, whether valid or not, at no cost to you. The insurance functions like any insurance contract between you and the issuing company.

What happens at the closing if there is a lender?
Many real estate transactions involve financing agreements. Your experienced Florida real estate attorney can assist you in determining what is the most advantageous plan based on your needs and on your financial situation. If the real estate transaction involves a mortgage, your attorney will handle communications with the lender on your behalf- dealing with the lender and mortgage contract adds another level of complexity to the real estate purchase for the buyer.

What happens at the real estate closing?
The real estate closing involves the signing, delivering and recording of paperwork to complete the transfer of the property from seller to the buyer. The parties, and their lawyers, will review the final documents that will be signed at the closing table and make any necessary changes. The closing documents for a Florida real estate closing may include a promissory note, warranty deed, bill of sale, affidavits and other title clearing documents, and a closing statement.

When all of the closing documents have been approved by all parties, a date and time to close the transaction is scheduled. At the closing, the closing attorney oversees all aspects of the transaction and answers any questions the parties may have which relate to the closing and/or the closing documents.

The seller signs all sellers documents, including the deed, and the he buyer signs the buyer’s documents and any applicable loan documents (if the purchase is being financed), and both parties sign the closing statement.

After the closing occurs, the seller, real estate agents, attorneys and other parties to the transaction are paid as set forth in the closing statement. Certain documents signed by the parties are sent to be recorded in the county in which the property is located.