Florida Real Estate Sales Contract
The Florida real estate contract, also known as a real estate sales contract or residential purchase and sales contract is the most important document in a Florida real estate transaction and should be prepared by an experienced real estate attorney. A typical Florida real estate contract is often prepared by a professional Realtor, but these contracts should be reviewed before execution by an experienced real estate attorney because of the legal conflict of interest between Realtors and their clients, and especially in the current market where short sales and foreclosure REO properties are common. This conflict of interest arises because the Realtor only benefits if the real estate transaction closes. Clients retaining an attorney to review their Florida real estate contract and represent them through the closing process can be comfortable knowing that their attorney is bound by law to protect and act in their best interests and is compensated for services whether or not the transaction closes.
There are two common forms of residential Florida real estate contracts used by attorneys, Realtors, buyers, and sellers in Florida. The first is the FAR contract, as drafted by the Florida Association of Realtors, and the other is the FAR/BAR contract, as drafted by the Florida Association of Realtors in conjunction with the Florida Bar Association. Drafters of both of these contracts strive to create fair contracts which incorporate the most recent Florida real estate contract case laws and legislative decisions, as well as allow options for individual modifications to meet the local and regional industry standards and practices.
Although some attorneys may draft original real estate contracts, such contracts present problems because all parties to the transaction, including the mortgage loan lenders must incur additional costs and time to have every line of the contract reviewed for acceptability and to verify that it meets local, state and federal laws, including the Real Estate Settlement Procedures Act, know as RESPA. Even using a FAR or FAR/BAR residential Florida real estate contract requires each party to negotiate the contract terms to achieve acceptable risk and costs in the transaction. These necessary negotiations are the reason that there are not readily available free real estate contract forms or real estate professionals recommending them. The following are only a few of the negotiable terms or options in a typical residential Florida real estate contract.
- Special short sale and foreclosure REO terms favoring the lenders and sellers
- Who pays for governmental stamp taxes
- Timeframe for inspections and surveys
- Mold inspections and outcome contingencies
- Who pays for title insurance
- Who chooses the closing agent
- Necessity of an as-is contract
- Who pays for current or future condominium or other special property assessments
- Allowable seller contributions and the lender’s acceptance thereof
- Property tax pro-rations
- Use of IRS section 1031 exchanges
- Financing contingencies and waiver thereof
- Verification of acceptance of all necessary condominium documents
- Procedures subsequent to one party breaching the contract
- Insurance proceeds in the case of loss during contract period
Buyers and Sellers should retain experienced real estate attorneys to review their Florida real estate contracts because real estate contract negotiations involve each side of the transaction striving to obtain the terms most beneficial to their own interests. Special consideration must also be given to the new clauses and addendums attached to short sale or foreclosure REO contracts, which are often ridgidly against the buyer's interest. Professional Realtors are always very helpful in contract negotiations, but most Realtors act in a transactional capacity, which means they do not represent any one party, rather they represent the transaction and their Broker. A party retaining a real estate attorney to complete the chosen real estate contract, negotiate the terms and draft any necessary addendums can rest assured that the attorney is working in their best interests, not simply preparing documents for the transaction.
Christian N. Folland, Esq., is a Florida Bar Certified Real Estate Attorney, and is the owner of Folland & Associates, LC, a real estate law firm, and South Pointe Title Company, located in Miami Beach, FL 33139. Mr. Folland has over a decade of experience drafting and reviewing real estate sales contracts and representing clients in the real estate closing process. Folland & Associates, LC and South Pointe Title Company have friendly experienced staff, a local office, and offer all clients a range of services from initial contract review, to contract negotiations, closing representation, and title insurance preparation, including both residential and commercial transactions.
We are a Florida neighborhood business. Our clients often find us through word of mouth and repeat business. Our goal is to protect our local and out-of-state clients while guiding them through their real estate transactions. If you would like an estimate for our contract drafting and review services call our office at 786-276-9900, email, or contact our Real Estate Attorney at our Florida office for a consultation.