Part 1 – The Contract and Depositing Earnest Money
Buying a home is one of the most important decisions in a person’s life because it is one of the biggest financial obligations that a majority of people will ever incur. Even for the most experienced sellers/buyers, closing on real estate in Florida can become an intimidating challenge. This article is written to assist you in understanding the basics of real estate transactions in Florida.
The real estate transaction begins with a written offer which results in a binding contract that is fully executed by both buyer and seller. The contract describes all terms of the transaction, including the price, terms of payment, conditions and deadlines involved for each phase of the sale. There is standard or “form” real estate contracts used in Florida. One standard contract is an “As Is” contract which gives the buyer the ability to inspect the property and either take it in its current condition or cancel the contract prior to the end of the inspection period. Another form contract provides a fixed percentage that the seller agrees to repair, if there are repairs necessary or if the percentage is exceeded, the seller can agree to pay the excess or cancel the contract. The Florida Realtors has its own set of forms, and the Florida Realtors and the Florida Bar have also collaborated to provide forms approved by both of those associations, referred to as the FR/BAR forms. Real estate agents and attorneys will be using these forms, which are very similar, but have slight differences in the standard terms. You can also use other forms or have a contract specifically drafted for your transaction, but the contract must, at the very least, provide the description of the property, the price and terms of payment, conditions of the sale and which party will be responsible for closing costs and fees. Regardless of the form(s) used, you must carefully read all provisions and seek legal advice on any term that you don’t understand BEFORE you sign the document. Also, before the contract is signed, you should consult with a real estate attorney to have the details of the contract reviewed to ensure that all of the terms and provisions are beneficial to you or to assist you in negotiating terms that meet your complete satisfaction. After all parties sign the contact, it becomes binding on all parties. There is no period of time for cancelation unless specified in the contract terms. However, there are conditions that may cause the contract to be voidable after all parties’ sign. The title commitment, property appraisal or inspection may reveal problems with the house which must be resolved in order to proceed to closing. If not resolved per the contract terms, the contract may be voided by one of the parties.
Depositing Earnest Money in Escrow
In order to evidence that the buyer is invested in the transaction, warranting the seller taking the property off the market, typically, a seller will require that a buyer deposit earnest money into an escrow account. Earnest money is a deposit made to a seller that represents a buyer’s good faith in purchasing the property. The earnest money serves as security that the buyer will move forward to the closing while the buyer proceeds to obtain financing, conduct a title search, hire a property appraiser, or have inspections completed before closing. The Sherrard Law Group can serve as your escrow agent and will keep your earnest money safe and secure until the closing is complete and ownership of the real estate transfers from the seller to the buyer.
No matter if you’re buying or selling, you should have a skilled representative working with you throughout the process. While an agent or realtor can answer certain questions you may have, only an attorney will act in your best interests and is often less expensive than people think. In fact, in most instances having a real estate lawyer close your transaction will cost no more than a title company will charge to conduct the closing. That is why we invite you to contact the Sherrard Law Group today to speak to a member of our legal team about your real estate transaction. We look forward to serving as your trusted legal representatives.
Next week – Part 2…Obtaining a Mortgage and Home Appraisal