“What documents do I need for my real estate closing”, is an important question, before a real estate transaction in South Florida. Closing is the final step in residential or commercial purchase and sale. On closing, the property title passes from the seller to the buyer, with the funds going the other way. Nevertheless, preparing the correct list of real estate closing documents in advance will ensure your dream purchase or sale goes through smoothly. Depending on the transaction, you will need various closing documents to finalize the process. Without a complete set of documents, the buyer may delay the sale or may back out altogether, causing you financial loss.
Important Real Estate Closing Documents in South Florida:
The Deed
A deed is a legally binding document that transfers ownership of an asset from an existing owner to a new owner. Deeds are commonly used to transfer ownership of property or vehicles between two parties. The seller must sign the Deed and record it in the local county’s public records, to transfer ownership in Florida. It is also referred to as a ‘Warranty deed’, confirming that the seller promises the stated warranties. The most common warranty is that the property is clear of all liens and creditor claims. Another common type is a ‘Quit Claim Deed’, used in ‘As Is’ real estate sales. Understandably, in such sales, the seller does not provide any warranties on the condition of the property.
What Is An Imperfect Deed
A Deed is an imperfect deed, without formal writing, notarization, and entry into the public record, The document and the transfer of title are valid, but the related paperwork may still need to be filed with the register of deeds.
Closing Disclosure
A closing disclosure document details the terms of the applicable law and is mandatory under Federal law. A Closing Disclosure is a five-page form with final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage.
As a buyer, you should carefully review your closing disclosure document to understand its terms. The Lender must provide buyers with the Closing Disclosure at least 3 business days before closing the mortgage loan. This 3-day window allows you time to compare your final terms and costs to those estimated in the Loan Estimate that you previously received from the lender.
Bill of Sale for Personal Property
Real estate sales in South Florida often include personal property, such as fixtures, furniture, home appliances, home electronics, and home decor. In most cases, you can transfer such items via a ‘Bill of Sale’. The Bill Of Sale should include quantity, price, and details of items of personal property, to be acceptable proof of transfer of goods.
Other Important Real Estate Closing Documents
Property Taxes Agreements
Any individual who owns real property is subject to state real property taxes, in addition to income tax. Florida doesn’t tax personal income, but Floridians pay property taxes and other applicable in-state taxes. Property tax requires owners of land and buildings to pay an amount of money based on the value of their land and buildings. Property taxes vary from state to state. At 0.80% average property tax rate, property taxes in Florida rank below the national average at 0.99%.
Usually, the real estate tax is part of the closing costs borne by the buyer. The seller does not pay property tax on the sale of the property. The seller is only responsible for paying the property taxes on their home for each day that they owned that home.
In Florida, tax bills are sent by the county taxing authority in November, and are payable before April 1 of the next tax year. In some cases, sellers have taxes left over from the gross tax amount of the previous year, which adds to the overall tax dues. To avoid paying an incorrect amount at closing, a ‘property tax agreement’ should mention tax liabilities when the final tax bill arrives.
Affidavits
Affidavits are sworn statements that record the signer’s belief that the information in a document is true and correct. It’s like an oath. As part of the closing documents in Florida, an affidavit reassures the buyer that there are no outstanding contracts, liens, governmental law violations, mortgages, claims, or other disputes against the property. This includes promising that there have been no improvements in the past 90 days with outstanding bills. If the seller lies while signing an affidavit, the buyer can subsequently sue the seller for falsifying information. A Florida real estate lawyer is in the best position to handle these documents.
Power of Attorney Documents
A Florida power of attorney allows persons to assign their legal authority over their financial (and other) matters to another person. This allows the other person, or agent, to act on the person’s, or the principal’s, behalf. This can happen if the seller or buyer is out of the state during the closing process, or is in bad health. The public records office records the Power Of Attorney, along with the Deed as part of closing documents. Power of Attorney is commonly appointed as part of an individual’s larger estate plan. But it can also be set up specifically for a real estate transaction.
Loan Estimate
On occasion, a lender may ask you to provide your initial loan estimate. The Loan Estimate is a 3-page document you receive within three business days after applying for a mortgage. It summarizes the loan amount, repayment terms, interest rate, and other costs associated with the mortgage. It lays out whether there are any balloon payments, or prepayment penalties, among others.
Certificate of Occupancy
All new residential or commercial building structures in Pembroke Pines require a Certificate of Occupancy (CO). And in order to obtain CO, all final inspections must conclude with a “pass” disposition, including fire if applicable. The builder provides this document to the buyer as proof that the building is safe and habitable.
Real Estate Closing Documents You Need To Understand:
Title Documents
The Deed and the Title of a property often confuse people. A deed is evidence of the event of transferring the title of a property from one person to another. A title is a legal right to use and modify the property how you see fit. Or transfer interest or any portion you own to a third party via a deed. A deed represents the right of the owner to claim the property. Title documents show who owns the property and if there are any known liens on the property. The buyer’s real estate attorney should review the title document to ensure it’s ready.
Promissory Note
As the name suggests, a promissory note is a “promise” from the borrower to repay the stated amount of money to the lender. Promissory notes contain key information about a loan. These include the loan amount, loan tenure, repayment schedules, and penalties in the event of non-payment.
A Florida promissory note can be either secured or unsecured. Secured promissory notes are collateral backed. Collateral can be real estate, a business interest, intellectual property, or some other personal property the borrower holds. The collateral (also known as a security interest) provides the lender with some recourse in the event of defaults. The lender can retain or sell the underlying property used as collateral to recover any losses from the default.
On the other hand, an unsecured promissory note does not have any collateral or security interests. If a borrower defaults on repayments, the lender really cannot do much. He will generally have to obtain a court judgment for recourse. Owing to these reasons, unsecured promissory notes are not advisable in matters of real estate sale and purchase.
Mortgages
A Deed Of Trust (also known as a Trust Deed) is a document sometimes used instead of a mortgage. Deeds of Trust transfer the legal title of a property to a third party. This can be a bank, escrow company, or title company, to hold until the borrower repays their debt to the lender. Although they’re not statutorily forms recognized by the State of Florida, some transactions use a Deed of Trust. When buying property in Florida with a loan, you should use a mortgage.
How we can help.
We have over 35 years of experience that can help you navigate a real estate transaction successfully and with minimum hassle. Our associate real estate law firms can review contracts, and provide legal services for securing your transaction. Our experts will guide you through the entire process, and provide the legal documents to protect your rights and liability. Look no further than Real Property Management Premier.
Contact us online or call 954-800-4433 and ask our property managers about our services in detail.
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