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Survey Now, Save Later

Oftentimes Buyers consider forgoing a land survey to speed along a transaction, cut costs, or simply because their “dream home” couldn’t possibly have anything wrong with it. However, considering the typical survey cost ranges from $300-$400, this is a risky gamble to take and not obtaining a land survey could result in costly and troublesome problems to the Buyer after closing. 

 Surveys identify key features such as:

-        The legal description of the property

-        Exact locations of fences, buildings, pools, sheds, and roads in relation
         to the property

-        Specific property boundaries & size of the property

-        Location of Improvements made to the land

-        Zoning regulations, setbacks that apply to the property and easements

Having this information allows the Buyer to better understand what is being purchased, and to help plan for any future additions or improvements (e.g., addition of a fence, pool, garage, etc.) to the property.  A survey would identify for example, problems such as a driveway encroaching on the neighbor’s land; or that the backyard shed actually encroaches 2 feet into a drainage and utility easement. Such issues can become major issues when a Buyer finances or refinances the property, or when the Buyer subsequently resells the property.

Unless a land survey is obtained, the following standard survey exception will be contained on the Buyer’s title insurance policy:

“Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land.”

This standard exception means that the Buyer/Owner’s title insurance policy would not insure or protect the property from any issues that could have and would have been discovered had a survey of the land been completed prior to closing the transaction. Further, if a survey is not obtained and the Buyer subsequently contracts to sell the property to a potential purchaser, the Buyer would be responsible for remedying any issue identified by the survey obtained by the potential purchaser.

In addition to obtaining a survey, a Buyer should have an experienced real estate professional review the survey and handle the closing and insurance of the title insurance policy. Timely identification of such issues is essential as real estate contracts only allow a limited time after receipt of survey for a Buyer to make objections and protect their rights. If you have any questions about surveys, title insurance or closings, we encourage you to contact a Florida licensed real estate attorney.Survey.jpg


"On or Before" Closings, Is There a Benefit?

 

It’s a popular phrase, but one common misconception regarding the use of the words "on or before" is that these words alone somehow provide either party to the transaction the unilateral ability to change the closing date to any date that he/she wants.  However, the addition of the phrase "on or before" only allows a change to the provided date by agreement of both parties to the contract.  If either party does not agree to the earlier closing date, then the earlier closing does not occur.  You might wonder, so what is the practical difference when using a closing date without the phrase "on or before"?  Nothing really, because if a closing date is provided without that phrase, and the parties then want to change the closing date, they again must separately agree to the change in the closing date.  

So what, if any, benefit is there to using the words "on or before"?  In my opinion, the benefits are twofold: (1) shows flexibility in the intent of the parties to perhaps close sooner, so all parties are on notice of this possibility and can prepare accordingly (albeit they must still agree to close earlier as stated above); and (2) use of the phrase may avoid the "time is of the essence” clause that exists in all the Florida contract forms, at least as it applies to the closing date.  

Much litigation exists over "time is of the essence" clauses, and in most cases, courts strictly enforce such provisions.  The use of this language essentially means that deadlines in the contract are firm deadlines, with penalties to a non-performing party for failing to meet the deadline, including a closing date.  For a buyer, this could mean a lawsuit for specific performance, or at a minimum, loss of the earnest money deposit funds.  The Florida form contracts state that typewritten or handwritten provisions shall control over the pre-printed provisions of the contracts.  Therefore, if the phrase "on or before" is typed or handwritten into the contract before a specified closing date, this may trump the "time is of the essence" clause as applied to the closing date.    

However, from a buyer's perspective, especially in financed transactions, the likely scenario is not that a transaction closes before the chosen closing date, but after.  Delays often occur in financed deals for one reason or another (e.g. underwriting delays, appraisal or inspection issues, etc.) and an agreement must be reached between the seller and buyer for an extension to the closing date, or the buyer could again be facing a specific performance lawsuit or loss of deposit.  Thus, when drafting the language for the closing date in an offer, if acceptable to the seller, one should consider using the language "on or about" as opposed to "on or before."  Logically, this language provides even more flexibility than its counterpart does, and would likely result in a reasonable extension to the closing date without enforcement of the "time is of the essence" clause and outright refusal by the seller to the proposed extension.

As always, before customizing any language or altering any terms of the form contracts, consulting with a Florida licensed real estate attorney is recommended.

 

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All Title Agents are Not Created Equal

In a burgeoning yet increasingly tricky real estate market that includes foreclosed properties, unpermitted improvements, high demand but low supply, and ever more litigious parties, it has never been more important to fully understand what the role is of your closing/title agent.  Choosing the right closing/title agent is an essential part of any real estate transaction.

Unfortunately, today, the terms “title agent” and “closing agent” are used to lump together all those who issue title insurance, yet there are vast differences in skill, knowledge and diligence among these parties. The options remain the same in Florida: there are non-attorney title companies and law firms / solo practitioners that can issue title insurance and conduct closings.

Title insurance premiums are fixed in Florida by law, therefore when clients “shop” among these options, the rates for title insurance will be constant.  The closing/title agent’s “closing” or “settlement” fee may vary some, but typically within a couple hundred dollars one way or the other.  Other costs related to closing (e.g. title search fee) will vary some as well, but to a negligible degree.  The assumption is that the law firm /attorney is more expensive and charges attorney’s fees, but these are widespread misconceptions.  In many cases, the attorney title agent is actually less costly.

While the fees may vary slightly among the options available, the services provided can vary greatly.  Attorneys are the only closing/title agents that are legally and ethically required to represent a party in the transaction and legally authorized to provide legal advice and legal protection.  Non-attorney title companies must remain neutral between the parties, cannot represent any side, and they cannot provide legal advice.  They can only conduct the closing and issue the title insurance policy.  Attorneys rather, as legal advocates for their clients, will provide legal advice to their clients throughout the closing on all aspects of the transaction, the property, the contract, and the closing documents, and will do everything they can to ensure that the title being conveyed is “marketable title.”  Furthermore, attorneys will timely object to title and/or survey related defects to protect Buyers’ deposits and their rights.  Non-attorney title companies may point out title defects noted in the title report, but they cannot make objections on behalf of a Buyer.  Additionally, they cannot provide legal advice as to options for dealing with defects, cannot provide advice as to the application of the contract terms to any particular factual situation, cannot interpret and examine a survey with the Buyer, and cannot handle disputes.

So no, all title or closing agents are not created equal.