Buying a House in Florida: Overview of the Process

Relocating to Florida? According to the reports, nearly one thousand people a day make that move. Here are some quick tips about buying a house in Florida, a process which could differ significantly from that which you've experienced in your home state or country.

Comparing Home Sizes

Make sure you are comparing apples to apples when looking at houses. In Florida, houses are normally measured and advertised based on the livable area, basically meaning air-conditioned square footage.

Sometimes, however, the advertised size might include the total area, with space that is not air-conditioned, such as a balcony, garage, or porch. Check the county property appraiser's website to determine actual square footage.

Special Considerations When Buying Condominium or Other Property Governed by a Homeowner's Association

One of your first questions should be whether the home you're interested in is within a deed-restricted community, as is quite common in Florida. If so, you'll need to learn not only about the property itself, but the restrictions, requirements and obligations applicable to the community as a whole—contained in "governing documents" including the declaration, articles of incorporation, bylaws, and rules and regulations.

As a homeowner in a deed-restricted community, you might face restrictions on everything from keeping pets to renting out your property. You will likely need to pay periodic (usually monthly) dues and possibly special assessments.

You'll also want to know what the community association takes care of (such as landscaping and stormwater runoff systems, which they might be required by state law to handle), and what you will be personally responsible for (perhaps walls you share with neighbors, or air conditioners on the roof of the building).

Do not rely on your sellers, real estate agents, or other non-attorney third parties to explain the restrictions and obligations contained in these documents. Find an attorney experienced in the area of community association law.

The attorney can help you obtain the current governing documents in a timely fashion and review them before you sign the purchase contract. For more information, see these articles on Buying a New Home or One in a Development.

Special Considerations When Buying Oceanfront Property

Florida has an unusual amount of coastal land, and has passed various laws regarding its use. If you are buying oceanfront property, you'll want to look into these laws, which range from prohibitions on harvesting natural vegetation such as sea oats and sea grapes (Fla. Stat. §161.242) to a law against interfering with manatees and sea turtles, especially during nesting season. (Fla. Stat. § 379.2431.)

As of a 2018 state law (HB 631), you will own the beach up to where the sand becomes wet (the mean high-tide line). The rest is open to the public.

Estimating Your Likely Florida Property Taxes

Before buying a home, you'll want to know whether you can afford the property taxes. Don't rely on the amount of property taxes your seller currently pays in estimating what you'll pay. Also, check into whether you might be eligible for any Florida property tax breaks, which include exemptions for veterans, low-income seniors, disabled person, and more.

In Florida, there is a cap on the assessed value on the tax roll. The exact amount is adjusted annually. It's possible for the market value to increase at a higher rate than the cap, which thus protects homeowners from big jumps in property tax obligations. However, that cap does not protect new purchasers of property, who might experience a big jump in taxes after their first year of ownership.

If your Florida residence will be your permanent residence, you might be entitled to a tax exemption. The basic one is in the amount of $25,000 off the assessed value of the home. This comes from one of the "homestead" protections provided for in the Florida Constitution. (See Art VII, 6, Fla. Const. for this and other exemptions.) You must apply for the exemption each year.

Types of Real Estate Agents in Florida

You will likely want the help of a real estate agent when purchasing a Florida property. One of the first things to consider, however, is who the agent represents. Too many buyers walk into an open house, fall in love with the place, then agree to have that agent draw up the paperwork—not realizing that they have entered into an arrangement with a "dual agent" whose loyalties lie partly with the seller.

In Florida, an agent can be a "single agent," who represents either the buyer or seller but not both; a "transaction broker," who provides limited representation to a buyer, a seller; or both. A transaction broker can facilitate the transaction by helping both parties, but can't represent one against the other.

You can get your own single agent, known as a "buyer's agent." That way, the seller's agent, also called the "listing agent," will represent only the seller's interests. But be aware that your contract with the buyer's agent might obligate you to pay the agent even if you find a house on your own. If you do not have your own, buyer's agent, you should have an attorney review the contract so your interests are protected.

The typical commission (which the seller pays) is 6%, and is split between these two agents. An agent who both lists and sells the property, thus acting as a "transaction broker, might agree to reduce the commission to facilitate the transaction.

Although a real estate agent can fill out forms that are approved by the Florida Association of Realtors and/or the Florida Bar, an agent is not licensed to draft legal documents, nor to give legal advice. (The exception would be if the agent is also an attorney.) Likewise, agents cannot give opinions about a property's title, and must advise buyers to get title insurance or legal advice as to title issues.

Who Pays for Title Insurance in Florida

Title insurance protects your ownership of the property from the claims of third parties, including those relating to obligations of previous owners. The insurance is issued at closing; one policy protects the owner's interest and another protects the lender's interest, if you are taking out mortgage financing for the purchase.

Exactly who pays the premiums is assigned in the contract. However, it's customary in Miami-Dade and Broward counties for the buyer to choose the title company and pay for the title insurance. Often, in other counties, the parties will agree that the seller pays for the owner's policy and the buyer pays for the lender's policy. The rates are established by state law.

For more information, see Title Insurance: Why a Home Buyer Needs It.

Using the Standard Florida Purchase Contract

Real estate agents prepare contracts using one of a number of standard forms created by the Florida Association of Realtors and the Florida Bar Association. However, these forms are very basic, and assign certain responsibilities to each party as a default. Some riders (supplemental forms) and other forms are available for various situations, such as when an amendment is needed.

If the forms need to be amended or the terms and conditions of the agreement between the parties are different from the language in the form, you'd be wise to hire an attorney to make those changes.

Deciding How to Take Title: Warranty Deed, Special Warranty Deed, or Quitclaim Deed?

The standard deed used to transfer property in Florida is what's called a warranty deed (or a standard or general warranty deed). That's good for you, in that it contains the seller's promise that title is good and free of encumbrances.

Other types of deeds can also be used to transfer property in Florida, however, and you might want to avoid them.

With a special warranty deed, promises as to title do not go all the way back through the chain of title to previous owners of the land, but apply only to the seller. Special warranty deeds are often used for purchases from a buyer at a foreclosure sale. An attorney can help you analyze the risks associated with this type of deed.

The type of transfer with the least protection is through a quitclaim deed. The seller makes no representations as to title or even ownership. Rather, the seller simply says that the transfer includes all interests of the seller in the property—and you have to hope that (or better yet, research whether) the seller has any lawful interest in the property at all.

Closing Process for a Florida Home Purchase

By custom in Florida, the closing, at which you formally assume ownership of the property, can take place at any location. Most often, an attorney or a title company, if it is issuing title, handles the closing.

The closing agent prepares the forms, which include documents required by the buyer's lender (such as the promissory note and mortgage), standard documents used to transfer title (such as the deed), and so on.

The closing agent will explain to you the nature of each document, but cannot give you legal advice, unless the closing agent is also your attorney. If you do not understand what you will be signing, or if your transaction involves more than a standard warranty deed and note and mortgage from an institutional lender, be sure to hire an attorney to represent you.