Buyers Guide when purchasing a property in florida by chic living miami

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The Parties

In the first part of the contract you will need to identify the parties to the agreement. This MUST include the legal name of the Seller as it appears on the title of the property and the legal name of the buyer. The biggest pitfall with this area of the contract is that people tend to leave co-owners off of the agreement or mistakenly substitute a person with a trust or a legal entity. To correctly fill out this area, you should refer to the prior deed or “vesting deed” and use the name of the “Grantee” on such deeds. If the property is owned by multiple parties, all parties must be listed on the document (and must eventually sign at the bottom). If the property is owned by a trust, the legal name of the trust must be listed in this area.

Section 1. Property Description

In this section you will identify the property. You need to be careful to tediously identify exactly what you will be purchasing. This area should include the street address, the county, the parcel ID #, and the legal description. Pay careful attention to the legal description and make sure that what you are putting on the contract matches the legal description of the property being sold or acquired. Section 1(d) & (e) pertain to “Personal Property” meaning appliances, window treatments etc. You should review the list of items in the contract. You will need to add or delete items of Personal Property that will be included or excluded from the sale. Please do not assume that something “goes with the house.” If it is not specifically listed, please add it to the contract.

Section 2. Purchase Price

In this area you will list the purchase price, escrow deposit, and financed amount. For sellers, I recommend getting a significant amount of money down that will be “non-refundable” after the inspection period has passed. This will keep the buyer honest and help ensure that after the inspection period has passed that buyer will close.

Section 3 & 4: Time for Acceptance and Closing Date

This area of the contract is fairly straightforward. The only advice I would offer is to be realistic about these deadlines. If the parties are unable to fully execute the contract before the deadline laid out in 3(a), the contract will become “stale” and will need to be revised and re-executed. This can cause undue delays and be quite irritating. As for choosing a closing date, please be realistic about how much time the parties will need to close. If a buyer is seeking financing, I recommend a closing date approximately 45 days from the date the contract is signed.

Section 7. Assignability

This is a somewhat complex component of the contract. Assignability means that Buyer has the right to assign all of his/her/its rights under the contract to another party who will stand in the shoes of the original Buyer. This new party has all rights the Buyer originally had. The question is, is this allowed at all or will Buyer remain responsible for fulfilling the contractual duties after the assignment has been completed. Sellers should be wary of allowing buyers to check the first box of the contract which allows buyer to assign the contract and be released from liability. This could be used to “flip the contract” or it could be used nefariously to assign the contract to a judgment proof person who has no ability or intention to close. If you are going to allow assignment, Sellers should insist that Buyers remain liable so you would check the second (2nd) box.

Section 8. Financing

In this section, the parties will indicate whether the Buyer will pay cash or whether there will be some type of financing. If the Buyer elects to pay cash there will be no “financing contingency.” If Buyer elects financing, Buyer’s obligation to purchase the Property will likely be contingent upon Buyer obtaining financing. Seller should insist that Buyer fill out Section 8 in its entirety meaning listing whether the loan will be conventional, FHA, VA, how long they have to be approved, how many years will the loan be, at what interest rate, how much will be financed. Sellers should also consider whether these numbers are realistic. The last thing that Seller wants is to waste time off of the market for financing that will never get approved because Buyer is seeking 98% financing; I recommend keeping this number around 80% at most.

Section 12. Inspection Clause

This section of the contract is one of the most well-known and focused upon areas. This clause will give Buyer the right to walk away from the deal and receive a return of Buyer’s deposit for any reason. Specifically, this section states that: “if Buyer determines, in Buyer’s sole discretion, that the Property is not acceptable to Buyer, Buyer may terminate this Contract . . .” This is a very powerful language. For this reason, Sellers will want to limit this time period as much as possible. Industry standards generally provide for a 10 – 15 day inspection period in a residential deal.

Signatures

The last section of this Contract that I will discuss is the signature area. Please make sure that all owners of the property and all buyers sign this contract. Also, for entities and trusts, you need to make sure that you have individuals with signing authority execute on behalf of the entity or trust. For a Corporation, this is the President, for an LLC the Manager, for a Trust the Trustee.

AS-IS-Residential-Contract-for-Sale-and-Purchase_2021Download

Florida’s New “FAR-BAR” Contract Changes Explained

As of November 1, 2021, the Florida FAR-BAR contract has changed. All agreements since then must use the updated version. The standard Florida Association of Realtors/Florida Bar contract 2021 updates include various major changes which are summarized and explained below.

Florida FAR-BAR Contract – Major Updates:

Loan Approval Period – Section 8(b)

The 2021 Florida FAR-BAR contract changes now require two new tasks to be completed during the loan approval period.

  • The buyer’s lender must have a ‘satisfactory’ appraisal during the loan approval period.
  • Buyers must gain financing approval as per the terms in the section.

Although the previous version of the Florida FAR-BAR contract also required that buyers gain financing approvals as per the terms of this section, the 2021 update applies a strict deadline.

This new requirement has been included to help speed up the receipt of appraisals if they’re required by the lender.

In the past, there was always a risk of low appraisals causing a transaction to fail even during closing if the appraisal was completed that late.

As of November 2021, low appraisals still pose a threat to a transaction. But with the obligation to have an appraisal during the approval period, sellers have the chance to put their property back on the market far faster.

Loan Approval – Section 8(b)(i)

This section completely changes the definition of ‘loan approval’ in Florida. Under the 2021 Florida FAR-BAR contract, there are two new updates:

  • A buyer is approved for financing provided for in the contract
  • The lender receives a satisfactory appraisal if required.

What does this mean? It is no longer considered a ‘loan approval’ if a buyer gains approval for financing if there is a condition that an appraisal must be completed in the future.

Delivery Methods – Section 19, Standard O

The 2021 updates have also changed the methods for the delivery notice.

  • Fax and email are now permitted for notice delivery.
  • Mail and personal delivery options remain.
  • Text messaging can no longer be used to provide notice. As they can be erased or lost, they’ve been deemed an unreliable method for providing evidence.
  • Social media postings or any other type of unnamed communication does not constitute delivery for the purpose of giving notice.

Other New Florida FAR-BAR Contract Changes

Other less notable but still important-to-know changes have been made, including:

Personal Property

  • ‘Personal property’ now includes doorbells, television wall mounts and mounting hardware, thermostats, mailbox keys, storm protection hardware and items.
  • Intercoms are no longer considered ‘personal property’.

Extension Period for Closing Dates

  • Extension periods for closing dates provided for under the CFPB’s (Consumer Finance Protection Bureau) delivery requirements have been reduced from ten days to seven days.
  • Extension periods for closing dates are only automatic if the loan has been approved via underwriting before the originally agreed closing date.

Loan Approval Notifying

  • Buyers now have the ability to wait until the end of the Loan Approval Period to inform the seller that the loan has been approved.
  • In the past buyers had to notify sellers ‘promptly’.

FIRTPA Costs

  • FIRTPA withholding and reporting costs have been added as an item to be paid by the seller.

Occupancy Clause

  • FAR-BAR contracts now include disclosures tied to existing short-term vacation rentals in the ‘occupancy clause’.

Closing Definition

  • Closing now states that “all funds required for closing are received by the closing agent and collects pursuant to STANDARD S”

Time Calculation Clarifications

  • A ‘calendar day’ is now determined by where the property is located. Clarifications are included for when a time period ends, such as on Saturdays, Sundays and national holidays.
  • There is no longer an ‘end of business day’ cut-off for notifications that extend.
  • Holidays that might extend the timeline include:
    • New Year’s Day
    • January 1
    • Birthday of Martin Luther King, Jr.
    • The 3rd Monday in January
    • Washington’s Birthday
    • The 3rd Monday in February
    • Memorial Day
    • The last Monday in May
    • Independence Day
    • July 4
    • Labor Day
    • The 1st Monday in September
    • Columbus Day
    • The 2nd Monday in October
    • Veterans Day
    • November 11
    • Thanksgiving Day
    • The 4th Thursday in November
    • Christmas Day

COVID-19 Related Force Majeure

  • Force Majeure now includes “governmental actions and mandates, government shutdowns, epidemics or pandemics”, to protect buyers and sellers from COVID-19 related events.

Update and New Riders

There have also been various riders updated and added such as:

  • Mold Inspection
  • Seasonal and Vacation Rentals
  • Pace Disclosure Riders

If they are relevant to your purchase or sale, we advise that you review the new Florida FAR-BAR Contract in its entirety. Doing so can help you avoid problems later. If you need any assistance, we welcome you to contact our Florida real estate lawyers.

Florida FAR-BAR Contract FAQs:

What is the Florida FAR-BAR Contract?

The Florida FAR-BAR contract is a ‘standard form agreement’ created by ‘The Florida Bar’ and ‘Florida Association of Realtors’. The Florida FAR-BAR agreement is used in the sale of real estate in Florida.

What is the FAR-BAR Contract For?

The Florida FAR-BAR contract is designed to make real estate sales easier. It allows those involved in real estate sales to simply and quickly input information and meet all the necessary requirements. It provides a reliable, consistent and legally binding agreement for all involved.

FAR-BAR contracts include the following provisions:

  • Sales price
  • Closing date
  • Inspection
  • Financial
  • Title

How Do I Fill Out a Florida FAR-BAR Contract?

You can read our guide on how to fill out an ‘As-Is’ Florida FAR-BAR Contract here?

Can Anyone Use a FAR-BAR Contract?

The FAR-BAR contract was made to be usable for anyone involved in a real estate transaction. However, it is highly advised that you work with a Florida real estate licensed agent when making a purchase or sale, including handling FAR-BAR contracts.

Critical Dates

Effective Date :

Escrow Deposit Due:

Buyer Application Due to lender and condo Assocaition:

Due Diligence Period :

Loan Approval Deadline:

Closingg Date: