Bernice Ross 2017-08-22 05:52:01
Call Florida Realtors® Legal Hotline to speak with an attorney on a range of topics. Or enter your question online. Members will receive a callback from a Legal Hotline attorney. As always, there is no charge for members. Call (407) 438-1409 or log in to floridarealtors.org and click on “Legal Hotline” in the Legal Center. LIABILITY ISSUES Should Sellers Allow Buyers to Move in Prior to Closing? Steps you can take to protect all parties Allowing buyers to take possession of a home prior to closing may seem like a good decision in select cases, but it can also lead to serious problems. Consider these actual cases: • A listing agent and buyer’s agent were excited that the transaction was going so well. So when the buyers asked permission to paint the house prior to closing, it was granted. After all, the house was vacant, and the buyers and the sellers hit it off when they met. The painters covered the hardwood floors with drop cloths to keep them clean. However, one of the drop cloths was sitting on a floor furnace. The furnace turned on during the night, ignited the drop cloth and the house burned down. • In another equally messy situation, the sellers agreed to allow the buyers to take possession prior to closing provided that the buyers released part of their deposit to the sellers. Once the buyers were in possession of the property, they refused to close the deal. The sellers filed a lawsuit. At the preliminary hearing, the judge ruled that because the sellers had taken part of the buyer’s deposit, the buyers now had a financial interest in the property. Because so many lawsuits were on file in Los Angeles, it would take five years before the case could come to trial. In the meantime, the sellers were stuck with no recourse. So what should you do if there is no other option but to let the buyer move into the property prior to closing? Here are the steps to take to protect all parties: 1 . DRAW UP A SEPARATE LEASE AGREEMENT THAT INCLUDES A SECURITY DEPOSIT. The most important distinction between a buyer in possession and a tenant in possession is that evicting a tenant is relatively easy. In contrast, getting rid of a buyer in possession often requires a lawsuit. To protect the sellers’ rights in a situation like this, it’s imperative that the buyers and sellers sign a separate lease agreement. Also, until the transaction closes, the buyers are tenants and should pay a separate security deposit, in addition to whatever amount they put down as an earnest money deposit. THIS IS NOT A “DO-IT-YOURSELF” PROJECT. Use a lease agreement that is generated by an attorney. Don’t attempt to write out a lease agreement that addresses the rules for eviction, how the deposit will be handled or the liabilities for damage to the property during the rental period. To do so is practicing law without a license. MAKE SURE THAT THE APPROPRIATE INSURANCE IS IN PLACE. Many sellers mistakenly believe that their homeowners’ insurance provides adequate coverage for buyers who move into their property. This might be the case if the sellers were still living on the premises and the buyers were their guests. The sellers should contact their insurance company to find out what is required regarding handling a shortterm rental, and pay the extra insurance fees. It’s more than worth it if there is a claim as in the case above. Also, the buyers should be aware that the lessors’ (sellers’) insurance does not cover their belongings. Furthermore, a sellers policy normally does not provide liability coverage for the buyers or their guests. The best way for the buyers to protect their interests is to purchase a renters’ insurance policy; the sellers should include this as a requirement in the lease to protect themselves from claims. To provide extra protection, the parties should insist that a home warranty policy is in place on the property. That way, if there is an issue with a major system on the property, there won’t be a conflict about who is going to pay for the repair. DOCUMENT THE PROPERTY CONDITION. The condition of the property is often a major source of contention if the buyers fail to close. The sellers/lessors should take extensive photos and shoot a video prior to the time that the buyers/lessees take possession. If there is a dispute, the sellers/lessors will have concrete proof of the prior condition of the property. The bottom line: Always advise the buyers and/or sellers to seek legal advice regarding a buyer’s moving into a property prior to closing. Document your advice to do so in writing. Reprinted with permission of RealEstate-Coach.com and Bernice Ross. Copyright 2013. CONDOMINIUMS NEW CHANGES TO CHAPTER 718 Effective July 1, the State of Florida has approved changes to Chapter 718, the law governing condominiums. While not exhaustive, here is a list of changes that you may come across in your real estate deals involving condominiums. All took effect July 1, 2017. Estoppel Certificates. A condominium association must now issue an estoppel certificate within 10 business days of receipt of a written or electronic request for said certificate. The estoppel certificate (sent via hand delivery or electronically) has a 30-day effective period (35 days if sent by regular mail). If a requested estoppel certificate is not delivered within 10 business days, a fee may not be charged for the preparation and delivery of that estoppel letter. Any condominium estoppel certificate is required to contain specific assessment information, such as the regular periodic assessment and frequency; an itemized list of all assessments, special assessments and other moneys that are scheduled to become due; whether there is a capital contribution fee, resale fee or other fee due and what the amount is; whether the association or the members have a right of first refusal to purchase the condominium; and the contact information for all insurance maintained by the association, among other things. The association may charge a reasonable fee for preparation and delivery of an estoppel certificate, but the fee may not exceed $250. If the certificate is requested on an expedited basis and delivered within three business days after the request, the association may charge an additional $150. An additional fee of up to $150 may be charged for an estoppel certificate on a unit if the current owner is delinquent in paying assessments. Renter Rights. A renter of a unit has a right to inspect and copy the association’s bylaws and rules. Previously, renters were not given these rights. Digital Documents. By July 1, 2018, an association with 150 or more units (which does not manage timeshare units) must post digital copies of the required documents on its website. For more information about these recent changes, go to floridarealtors.org/LegislativeCenter/ LegislativeNews/index. Q: TALK TO AN ATTORNEY Advice from the Florida Realtors Legal Hotline CONTRACTS If buyers don’t receive loan approval, what is their deadline to cancel a Florida Realtors®/Florida Bar contract (version 5 dated April 2017) based on the financing contingency in Section 8? The buyers deadline to deliver a written cancellation notice is the end of the loan approval period (30 days after the contract’s effective date if the parties leave the box blank). Also, before the buyers can exercise the termination right, the contract requires him or her to apply for a loan by the specified deadline and make a good faith effort to obtain loan approval. DISCLOSURE Is a seller obligated to complete a seller’s real property disclosure form under Florida law? No. However, although the form itself is not a legal requirement, the seller does have a duty to disclose to the buyer facts not readily observable that materially affect the value of the property, if any such facts are known by the seller. Please note that, although the seller may not be obligated to provide a form disclosure, a real estate company could create its own internal rule requiring associates to secure a form disclosure from the seller. ENVIRONMENTAL ISSUES I represent a buyer who wants to buy vacant land and develop it. The land my buyer is interested in has gopher tortoises on it. Are there any special rules regarding gopher tortoises? Yes. In Florida, the gopher tortoise is classified as a threatened species, and the tortoise and its burrow are protected by state law. It’s illegal to harm, capture or transport gopher tortoises or damage their burrows except as allowed under a specific Florida Fish and Wildlife Conservation Commission (FWC) permit. Before development-related activities can begin, property owners may need to capture and relocate all gopher tortoises, which can be costly. Your buyer can find more information about gopher tortoises and the permit process on the FWC’s Web site: myfwc.com. ESCROW As the broker for a large real estate office, I maintain an escrow account at a local bank. As my company continues to grow, I want to hire an accountant to prepare my monthly reconciliation statement. May an accountant prepare this reconciliation statement on behalf of the broker? Yes. Rule 61J2-14.012, Florida Administrative Code, requires that the broker cause the reconciliation statement to be made once monthly. The accountant may prepare the actual statement, but pursuant to the above rule the broker is still required to review, sign and date the monthly reconciliation statement. Additionally, the broker is ultimately responsible for the funds in escrow.
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