DOES THE FLORIDA REAL ESTATE SELLER
NEED A LAWYER?
Copyright 2003 by James W. Martin, Esq.
Whether you are selling a home or an office
building, the real estate seller needs a lawyer. Why? Because the
seller has two goals: get paid and avoid litigation. The lawyer's job is to help the seller get paid by preparing and negotiating a sales
contract, helping the seller through the buyer's due diligence inspection
period, and then either preparing closing documents and handling the closing or
reviewing closing documents and providing advice or attending the closing.
The real estate seller's lawyer can do the following:
1. Clear Contract. Litigation is less likely with
a clear contract, so the lawyer can assist in preparing and negotiating a clear
contract for sale of the real property. Sometimes this is done with a
standard form such as the FAR/Bar form issued by the Florida Bar and Florida
Association of Realtors or the FAR forms issued by the Florida Association of
Realtors. The lawyer often prepares addenda to these standard forms to clarify
aspects of the transaction. Sometimes, however, the lawyer prepares a form
specifically for the particular transaction rather than using a standard form
that has many provisions that are not applicable to the particular case.
Unlike real estate brokers, lawyers are trained in the art and use of words and
the drafting and interpretation of contracts.
2. Deadline Follow-up. All contracts for the sale
of real property should include deadlines for such matters as inspections,
financing, title insurance, surveys, closing, etc. To avoid litigation, it
is important to comply with these deadlines. The lawyer can assist the
seller in meeting contract deadlines in order to achieve the goals of getting
paid and avoiding litigation.
3. Limit Liability in Contract, Deed and Closing
Documents. Legal documents often contain representations and warranties that
are binding upon sellers after the closing in a way that may obligate the seller
to pay damages to the buyer even years after the closing. Since the
seller's only goals are to get paid (and stay paid) and avoid litigation, it is
often important to limit the seller's representations and warranties in
contracts. Lawyers know which warranties and representations are standard and
which are not, which can be negotiated out and which must stay.
4. Cashier's Check or Wire Transfer at Closing.
The seller must accept only a cashier's check or a wire transfer of net proceeds
at the closing. If the seller accepts a title agency's escrow check, then the
seller accepts the risk that the check may bounce. While most title
agencies are reputable, there is no way to tell whether its escrow check will be
honored by your bank. If it is not, the seller loses and the buyer gets to
keep the deed. (There is a Tampa case directly on point that so holds.) So, it
is essential that the seller only accept at the closing a check that states on
its face either "CASHIER'S CHECK" or "OFFICIAL CHECK" and is issued by a Florida
bank.
5. Seller Benefits When Attorney is Title Insurance
Agent . It is customary in St. Petersburg, Tampa, Pinellas County,
Hillsborough County and much of Florida for the seller to pay the documentary
stamp taxes and the title insurance premiums. Documentary stamps presently cost
70 cents per $100 of the sales price, and title insurance premiums also cost a
percentage of the sales price. When the seller has a lawyer who also acts
as a title insurance agent, the attorney can reduce the usual legal fees for the
closing in recognition that the attorney is also being paid part of the title
insurance premium. This helps the seller because the state sets a
minimum premium for title insurance that the seller would have to pay anyway
if the seller only used a commercial title insurance agency without a lawyer.
And, because title insurance premiums are based on sales price, the higher the
sales price the higher reduction in legal fees the seller can receive.
Therefore, the seller of Florida real estate, whether it
is residential or commercial, should always engage a Florida lawyer to assist in
the transaction.
(See the
companion article for buyers.)
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