This article highlights some facts you should know before buying an existing home in Florida. The author is a Florida-licensed attorney who is recognized by the Florida Bar as an expert in business litigation law, which includes real estate litigation. However, this article is not meant to provide legal advice or to form an attorney-client relationship. It is meant only to provide general information about this topic. Each situation is different so it is best to consult with an attorney as to your particular circumstances.
By way of background, Florida’s property laws are derived from English common law. Therefore, the basic manner in which Florida law deals with property ownership, as well as the methods by which that ownership is documented and recorded should not be all that foreign to out-of-state residents or non-US residents, such as Canadians, for example, who are familiar with English common law.
It is important to know that in the 1985 landmark decision of Johnson versus Davis, the Florida Supreme Court decided that the concept of caveat emptor or buyer beware does not apply to residential real estate purchases in Florida. Form that time, Florida law placed an affirmative duty upon sellers to disclose to a buyer known, material defects that are otherwise unobservable. This is significant in that as a consequence buyers have the right to rely on a seller’s material representations about a home. However, whether a particular representation is material to a transaction as Florida’s Courts define and interpret that term depends upon the particular circumstances of each transaction.
Generally, in residential real estate transactions in Florida, particularly where licensed brokers are involved, standard forms approved by the Florida Association of Realtors and the Florida Bar (appropriately called Far/Bar forms) contain provisions for these required material disclosures. Importantly, buyers are not limited to the disclosures on these forms and can inquire of additional information they deem important to their decision to purchase the property. However, while a buyer may have a legal right to rely on representations and disclosures to a certain degree, a prudent purchaser will review and question those representations he or she deems important and may even engage professionals, such as home inspectors, to verify the information. One of the better methods to avoid having to pursue a seller post-sale is to proactively verify and validate significant disclosures pre-closing.
Occasionally, the question arises in these transactions as to whether sellers can avoid the disclosures imposed on them by Florida law by using “as-is” disclaimers. The answer from Florida’s Courts is a resounding “no”. A seller may not unilaterally obviate or limit its disclosure obligations imposed by Florida law. However, whether a seller has an obligation to disclose a specific matter or whether it is material is particular to each transaction and must be examined in light of the circumstances of that purchase and sale.
Concerns also arise for buyers and sellers as to whether a seller must disclose material and unobservable defects that the seller either believed was remedied or that the seller hired third-parties to fix. In those situations, Florida law is less clear as to the seller’s liability and the circumstances of each particular situation control. Likewise, because a seller is only obligated to disclose material defects of which it is actually aware, a buyer must recognize that it will have to prove the seller’s knowledge of a material defect if the buyer pursues the seller for damages post-closing. If the defect is truly unobservable, then that may not be an easy proposition. Therefore, a better approach is to apply the practice of trust, but verify.
With regard to title issues, when purchasers finance a transaction through a commercial lender those institutions generally require a pre-closing title report and title insurance for their own protection. This is done generally to verify and ensure that the lender’s mortgage will be in a position of priority. Oftentimes, conditions of a loan will even require the satisfaction of all existing liens at closing to preserve the lender’s priority.
For the buyer financing the purchase, this process usually occurs behind the scenes and the average buyer is generally unconcerned with this aspect of the transaction, turning their attention more to the physical inspection of the property. However, even in cash transactions, the buyer should be aware that it can and probably should either require the seller to provide or independently obtain a review of the title as part of the buyer’s due diligence.
The Florida Bar recognizes the experience and expertise of attorneys that practice in the areas of real estate, construction, and civil/business litigation with Board Certification in those areas. You can obtain a list of Board Certified attorneys from the Florida Bar at www.flabar.org. You can also contact the local voluntary Bar for the County in which the property is located for a referral.