|Buying A Home
Buying a home may be the biggest single
investment of your lifetime. A life's savings may be invested in this one venture.
Thus, it is extremely important that you, the
prospective buyer, use the greatest caution in buying a home which will not only provide
you with comfort, but will cause you as little trouble as possible while living in it and
when you decide to sell it.
For your protection, consult your family
lawyer before you sign or buy. His or her training and experience will help you avoid
THE PURCHASE AND SALE AGREEMENT
The paper first given to a prospective buyer
by a real estate broker is the purchase and sale contract. Few people realize that this
paper is the most important step in purchasing a home the details of this agreement
determine what you buy and how you buy it. Before signing, read the agreement carefully
and discuss with your family lawyer such items as the following:
- Exactly what land, buildings and
furnishings are included in your offer? Are stove, refrigerator and the like included?
- What details regarding payments should be
- When can you take possession?
- Is the seller to furnish you with a good,
- Which kind of deed should the seller give?
- Who pays for the examination of the title
to the property in the event the offer is accepted? Who pays for the abstract of title or
- Have utilities been installed and paid for?
- Should a surveyor be employed to determine
whether the improvements are actually located on the property? Who should pay for the cost
of the survey?
- If a mortgage is to be given, who will pay
the intangible tax on the mortgage?
- If a loan is to be obtained from an outside
lender, who will pay the loan closing costs?
- If termite damage is found, shall the
seller pay the cost of repairs?
- What are the zoning regulations, or
restrictions, on the use of the property?
- What is the time within which the purchase
should be accepted or refused? Is the date of such acceptance to be vital to the offer?
- If your offer is accepted, what steps
should be taken with respect to insuring the improvements to protect you, the prospective
purchaser, pending the final closing?
- What persons (husbands and wives) should be
required to sign and accept the offer?
- Are boundary lines properly specified?
- Are timber, mineral and water rights, if
any, properly covered?
- Who is responsible for paying of taxes?
- How should the agreement be executed to
make it binding?
- What are the remedies if the buyer or
- Should the purchase be contingent on any
outside matters such as the availability of financing on acceptable terms or the sale of
the house which you presently own?
- Whose responsibility is it to pay for the
- Whose responsibility is it to pay for
governmental special assessments that arise prior to closing?
Your lawyer may not be able to answer some of
these questions until examining many public records, including court and governmental
It is desirable that your purchase agreement
be prepared by your own lawyer or reviewed by him or her before you sign. Only then will
you know the agreement covers your requirements.
THE TITLE TO REAL ESTATE
A real estate title is a right to partial or
whole ownership to land and improvements upon the land. If you can prove your title
against all the world, and if it is for whole ownership, it is a good title. If, in
addition, the evidence or proof of ownership is contained in proper public records, it is
a good record title. Ordinarily only a good record title is marketable.
When purchasing a home, you should request a
"marketable" whole title. Your lawyer, after proper investigation, can tell you
whether the seller is able to convey such a title to you. No one can advise you without a
A warranty deed is a conveyance of title plus
some warranties or guarantees. The usual guarantees or warranties by the seller are: good
title, freedom from encumbrance other than as excepted, and possession to the buyer as
against all others.
These guarantees are not adequate protection
since they are no better than the present and future financial responsibility of the
seller. A warranty from a financially responsible seller is comforting and desirable. It
is not a substitute for a title examination. Title defects have a way of lying dormant for
years and perplexing a buyer long after he has paid for the land and after the seller is
NECESSITY FOR TITLE EXAMINATION
A title examination is a study of the
abstract of title and sometimes of other title evidence. (An abstract of title is a
collection of public records relating to the ownership of a parcel of real estate.) Your
lawyer examines the applicable title information to determine who owns the lands, defects
in or claims against the ownership and any action needed to secure good record title.
This may seem to be a simple operation. It is
not. It requires interpreting numerous deeds, mortgages, wills, court decrees and other
instruments; considering the sequence of time of transactions and events affecting the
title; and applying laws and court decisions to the various situations disclosed in the
applicable title information.
The examination of a title requires a
thorough knowledge of many phases of law. An examination of applicable title information
may involve evaluating a variety of problems such as the validity of divorces, the
effectiveness of foreclosures, the scope of restrictions, the presence of federal and
state tax liens and the effect of old claims against the land.
Whether examining an old United States patent
or passing on a deed of recent date, the process of examination is, at every step, the
consideration of legal problems. Experience can speed up the work, but attorneys almost
daily encounter new situations requiring new legal research.
Your lawyer can bolster the title examination
by issuing or obtaining for you an owner's policy of title insurance. In such a policy,
the title insurance company contracts with the insured person named in the policy to
protect the title as insured against financial loss and the cost of defending the title in
But like any insurance policy, the coverage
is no greater than is stated in the policy. Any policy can list matters substantially
affecting title which are exceptions to the coverage and are not insured. Another type of
policy, mortgagee's or lender's title insurance, protects only the holder of the mortgage
and not the owner.
Your lawyer representing your interest can
advise the extent of protection given by your owner's policy. Some attorneys include the
policy's cost in an overall charge for all legal services. Other attorneys separate the
charge with the cost for the policy being based on the real estate purchase price. This
price is the maximum amount for which you are insured. There is only a one-time charge for
an owner's policy and its protection continues for as long as you or your heirs own title
to the insured property.
Buyers often have the title to a home placed
in a joint ownership arrangement with special words inserted so that title passes
automatically to the survivor when one of the joint owners dies. This arrangement is know
as "joint tenancy." In Florida, when land is owned jointly by husband and wife,
it is known as an "estate by entirety." Owning property in this manner may be a
good idea for some, but, again, it may not be good for you. You should determine the
income, gift and death tax consequences before having your home placed in joint ownership.
Joint ownership occasionally leads to
lawsuits over a right of occupancy, the right to the rents if not occupied by all the
joint owners and the duties of the various owners as to payment of mortgages, taxes and
cost of repairs and upkeep. If the joint owners are parent and child, or brothers and
sisters, the subsequent marriage of one of them may lead to conflicts and complications.
IS THE BUILDING UNDER CONSTRUCTION?
If the home you are buying is still under
construction or has been completed recently, special care is required to make sure that
all building costs have been paid by the sellers and that you are fully protected as to
the provisions of the Florida Mechanics' and Material-men's Lien Law. You should consult
your lawyer for full information as to your rights and responsibilities under this law.
This may be true also when repairs on a house
have been made recently or building material recently delivered.
Failure to protect against mechanics' liens
can result in the property's being subject to liens even though the full contract price
FINANCING YOUR HOME
Many financing arrangements are available to
today's home buyers: variable rate mortgages, conventional mortgages, government insured
VA and FHA loans, as well as specialized mortgages designed for specific financial
Your attorney can help you determine the most
advantageous plan, based on your needs and capabilities to repay, including certain tax
advantages appropriate to your personal financial situation.
Regardless of the type mortgage loan, you
should be aware of specific terms the lender may require such as:
limitation of your right to sell without
maintenance of insurance levels
tax and insurance escrow payments
collateral rights to borrow from another
limitations on your use of the property
lender's right to change interest rates if
you assume an existing mortgage
lender's right to change interest rates
during term of the loan
You should also determine if, in the future,
you'll be allowed to borrow additional money secured by the same mortgage. You'll want to
ask your attorney to explain all costs of the loan, including service charges, appraisal
fees, survey costs, escrow fees and lender's attorneys fees.
Remember, when you sign a mortgage note, you
are ordinarily responsible for the full payment of the total indebtedness. Even if you
later sell to someone who agrees to assume payment of the mortgage, your responsibility
continues unless the lender releases you.
If you and your attorney feel that the terms
of your mortgage loan are satisfactory, then you'll need to consider a very important step
in protecting the investment you are about to make.
CLOSING YOUR PURCHASE
Closing a real estate sale is a technical and
complex operation. The careful drafting of papers to carry out the actual intent of the
parties is part of the job. Meeting the technical title requirements is another step. The
proper signing and acknowledgement of papers is another. Delivery and recording of the
papers are usually the last steps.
As a careful buyer, you should insist that
your lawyer be present at the closing, checking each detail. He or she knows which points
are significant in making your purchase the trouble-free ownership to which you are
If you need a lawyer and don't know how to
find one, many areas in Florida have lawyer referral services listed under
"attorneys" or "attorney referral services" in the yellow pages of the
telephone book. This service will give you an appointment with a lawyer for a nominal fee.
If there is no lawyer referral service in
your city, the statewide Florida Bar service can locate a lawyer for you. You can call
this service, which operates only in cities where there is no local program. They will
refer you to an attorney for an initial one-half hour consultation for $25.
The material in this pamphlet represents
general legal advice. Since the law is continually changing, some provisions in this
pamphlet may be out of date. It is always best to consult an attorney about your legal
rights and responsibilities regarding your particular case.