Miami Condo Short Sale Contract Tip #4
Short sales of Miami condos and homes are often a great way for a buyer to get an excellent deal on a property and a seller to get out from under an upside down mortgage with hopefully less damage to credit and his or her pocketbook. This is the fourth of several blog entries, in no particular order, each with a tip for the buyer or seller or both, to help make sure the deal goes smoothly while giving protection to one or both parties.
Miami Condo Short Sale Tip #4:
Closing Agent and Fees. Miami condo real estate transaction local practices demonstrate that the buyer chooses the closing and title agent and also pays for the title insurance policy, while the seller pays for the title search and the tax stamps on the sale, and each pays a reasonable closing fee. In a short sale, sellers and listing agents often work with a title company of their choosing early on in the process to get the initial closing paperwork ready to submit to the lender, or maybe a previous buyer backed out and some of this work was done. In these cases where the seller is demanding to choose the title agent because some of this title work has already been done, the buyer should be open to accept this, but at the same time should require that the seller pay for the buyer’s owner title policy and basic closing costs, while the other standard closing fees remain the same–Sellers’ lenders do not have any problem with this, but they will not pay for unreasonable “negotiation” or other third party fees. Often times there may be a third party short sale negotiator company wanting to get paid, and as a result the seller, to avoid paying the fees, will attempt to dictate that not only does the buyer have to pay for the title insurance, but also exorbitant closing fees and costs, while not being able to choose their own closing and title agent. This can get quite expensive for the buyer, especially when they also hire a real estate attorney to advise them on the transaction. Like any contract, the terms should be a trade off between the parties, not one party dictating the terms. There is always another deal for the buyer if the seller is unreasonable.
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Miami Condo Short Sale Contract Tip #3
Short sales of Miami condos and homes are often a great way for a buyer to get an excellent deal on a property and a seller to get out from under an upside down mortgage with hopefully less damage to credit and his or her pocketbook. This is the third of several blog entries, in no particular order, each with a tip for the buyer or seller or both, to help make sure the deal goes smoothly while giving protection to one or both parties.
Miami Condo Short Sale Tip #3:
No extra cash from seller or buyer. Miami condo short sale contracts should have in the additional terms section a simple clause that states that neither the buyer nor the seller will be obligated to bring any additional cash to closing or otherwise increase the purchase price. If based on the title search, lien search, or seller’s lender requirements that additional cash or a higher purchase price is needed, this should be a term to negotiate after the lender has given approval. Also, sellers should include a provision that they are not obligated or responsible to clear liens or other issues, or they may find that not only are they getting zero dollars at closing, but they have to bring money to the deal or otherwise pay to clear title issues.
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Miami Condo Short Sale Contract Tip #1
Short sales of Miami condos and homes are often a great way for a buyer to get an excellent deal on a property and a seller to get out from under an upside down mortgage with hopefully less damage to credit and his or her pocketbook. This is the first of several blog entries, in no particular order, each with a tip for the buyer or seller or both, to help make sure the deal goes smoothly while giving protection to one or both parties.
Buyers’ contract time periods. Make sure that there is a bona fide Short Sale Addendum to the contract, the most common being the FAR form. In this Addendum, make sure you check the box or otherwise have in writing that the various time periods, such as for inspections and financing, do not start “running” until you have received written notice of the Seller’s lender’s approval of the short sale contract price. This is important because no buyer should be obligated to spend money on inspections, loan applications, etc., if the contract has not even been approved by the seller’s lender.
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Miami Condo Reverse Mortgage
Miami Condo and home reverse mortgages are one of the recent targets of fraud schemes in the Florida real estate arena. Reverse mortgages, whether on a Miami Condo or home anywhere in Florida or the United States, by definition allow senior property owners (defined as age 62 years or older) to borrow against the equity in their homes without the hassle of having to secure a normal equity line of credit. In particular, as part of the Housing and Economic Recovery Act of 2008, senior homeowners are now able to use a reverse mortgage to purchase a primary residence. Unfortunately less than reputable sellers and developers are using the new rules to sell low quality properties, often with inflated values, to seniors who may not be fully aware of the estate planning issues and the complete cost of ownership of the properties, including furnishings, taxes, utilities, condominium fees, special assessments, and other unfamiliar fees. Additionally, to avoid the down payment requirements, some sellers contract with the senior buyers to “give” or otherwise deed them the properties first, with the subsequent requirement of completing reverse mortgages to pay for the “gifts.”
Many Florida reverse mortgage companies will focus on their job of getting the reverse mortgage application properly completed and approved for the Miami condo or other property, rather than the underlying property quality, estate planning issues, or individual ramifications of the decision. Reverse mortgages are more complicated than standard mortgages, and have many different and generally substantially higher fees. As a result, borrowers, and where appropriate, their families, should always consult BOTH a Board Certified Real Estate attorney AND a Certified Public Accountant before signing the paperwork. This will cover both the legal and estate planning issues involved.
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Miami Condo First Time Home Buyer Free Tax Credit
United States Congress, in February 2009, altered the first time Miami condo and home buyer tax credit, making it $8,000.00, and eliminating the repayment requirement. First time Miami condo and home buyers can take advantage of this primary residence tax credit through December 1, 2009. Unless Congress votes to extend the program, buyers need to be sure to take part in the program by December 1, 2009.
According to the IRS Website:
“For 2009 Home Purchases
The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1.
For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer’s main residence within a three-year period following the purchase.
First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return. News release 2009-27 has more information on these options.“
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Miami Condo Short Sale Contract is Binding
A real estate contract signed and accepted by the Seller and the Buyer, whether for a Miami condo or home, is a binding and fully enforceable contract, regardless if the contract is “subject to short sale lender approval” or not. If such real estate contract is subject to Seller’s lender approval it does not necessarily mean that if the lender requires any alteration the Seller or Buyer can immediately cancel the contract. It is important to clearly include contract terms, usually in the “Additional Terms” section of the contract, stating, either on behalf of the Buyer, Seller, or both, that if particular terms are not approved by the Seller’s lender, that the party in question may cancel the contract, usually with full release of all deposits. Also, an executed contract should be marked as “Pending” in the MLS, per your local MLS rules.
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Florida Department of Revenue Form DR-430 is now a requirement when transferring ownership or control of the entity, such as a corporation or partnership, (rather than the usual title deed) holding fee title to the non-homestead Florida real estate property, whether in Miami-Dade County or other Florida County. The time frame for filing the DR-430 is not defined, but the best course of action would be to file the DR-430 at the time of the transfer of control of the entity. Failure to properly file the Form DR-430 can result in penalties. Do not assume that you can avoid paying transfer tax, or avoid County tax assessment updates, by selling your shares or other interest!
Here is a copy of the Florida Department of Revenue Form DR-430, including the instruction:
Florida Department of Revenue DR-430 now required Page 1
Florida Department of Revenue DR-430 now required Page 2
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Top Five Reasons Why Buyers Need Real Estate Title Insurance
1.The buyer’s lender requires it to protect their interests in the property.
2.The seller may be selling the property in a fraudulent manner.
3.The seller may have obtained the property in a fraudulent manner.
4.A prior seller may have acted in bad faith or committed mortgage fraud.
5.The seller or a prior seller may have a personal judgment recorded against them which may attach to the property.
Explanation: Real estate title insurance, unlike most insurance, insures the property going backward from a point in time rather than forward. This means that when a buyer purchases a piece of Florida real estate or a Florida condo, the title insurance insures or otherwise guarantees that the buyer is covered if a defect in the property title is discovered. Property defect examples may include the following:
The seller has fraudulently sold the property to another recent buyer.
A prior seller has fraudulently sold the property to more than one buyer.
The seller purchased the property while committing mortgage fraud.
The boundaries may be incorrect and part of the property may actually be owned by an adjacent neighboring property owner.
There may be an easement which decreases the value of the property.
Structures on the property may encroach onto valid easements or an adjacent property.
There may be an older unrecorded deed transferring the property which is now recorded.
The seller or prior seller may have outstanding personal judgments which could attach to the property.
A prior owner may have unknowingly sold the property without satisfying family members’ homestead rights
Contact Christian N. Folland, Esq., a Florida Bar Certified real estate attorney and Lic. real estate broker at 786.276.9900 or cfolland@southptc.com for all your confidential real estate legal, Realty and title needs. Folland & Associates, LC is a full service real estate law firm in Miami Beach, FL 33139. South Pointe Title Company and Real Estate Miami,Inc. are owned and operated by Christian N. Folland, Esq.
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Many of the most problematic mortgage loans made in Florida were on Miami condos and condos in general. As a result, Fannie Mae has altered its guidelines for high risk Florida condo mortgage loans, as of January 15, 2009. Two of the most important requirements in the new guidelines for Florida condo mortgage loans for Fannie Mae are the following:
1. New and newly converted condominium projects must have at least seventy percent (70%) of the total number of units in the project sold and closed, or be in contract to be used as a principle residence or second home. Formerly, the requirement was fifty-one percent (51%) of total units.
2. No more than fifteen percent (15%) of the total number of units can be thirty (30) days or more past due on their condo association fees.
Although these restrictions are troublesome for buyers, they are an important step towards creating less risky mortgage loans and a more stable real estate market in both the near and long term.
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Real Estate Transaction Power of Attorney Tips
A power of attorney (“POA”) is a legal document which allows an individual to authorize a second individual to act on his or her behalf in order to carry out his or her will. This often occurs when the purchaser or seller of a property is not available to execute the necessary purchase and sale documents, or loan documents, and a spouse or other trusted individual is given the authority to execute the documents for the absent party. A Florida Real Estate Power of Attorney used to transfer or encumber real estate title has particular requirements. The following are five tips to remember when using a Power of Attorney for a Florida real estate transaction:
1. A Florida Real Estate Power of Attorney must include the term(s) “to sell and convey” or “to purchase and acquire” or “to execute any and all mortgage or other documents encumbering the property” or other language specifically directing authority to transfer or encumber real estate. although a POA without these terms may also be valid, correct terminology will usually eliminate title insurance underwriter closing delays.
2. A Florida Real Estate Power of Attorney must be clearly executed by the party granting authority, and must include two witnesses.
3. A Florida Real Estate Power of Attorney must be properly notarized. The Notary Public can also be one of the witnesses.
4. A Florida Real Estate Power of Attorney must include the address or legal description of the specific subject property.
5. A Florida Real Estate Power of Attorney must be in recordable form if it will be used to execute a recordable document because it must be recorded along with the other closing documents.
Contact Christian N. Folland, Esq., a Florida Bar Certified real estate attorney at 786.276.9900 or cfolland@southptc.com for all your Miami Florida real estate law and Miami Florida title insurance needs.
Folland & Associates, LC, a full service real estate law firm in Miami Beach, FL 33139, and South Pointe Title Company, are owned and operated by Christian N. Folland, Esq.
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