The title commitment is one of the most important documents in a real estate transaction. However, most buyers have no idea what the title commitment means or what title insurance covers. The title commitment is a document issued by the closing attorney or title company that will be issuing title insurance to the after closing. The title commitment gives a detailed account of the ownership of, and liabilities associated with, that property, and it explains precisely what the title insurance policy will and will not cover, once it’s issued. Having your title commitment reviewed by an experienced real estate lawyer protects your interests and investment by making sure no surprises are lurking in the text of your title commitment.

Overview Of The Title Commitment

In addition to spelling out the requirements necessary to provide title insurance, the title commitment provides a detailed listed of any liens, obligations, or other burdens that may be attached to the title for the property, and limitations on the use of the property, like easements; existing leases; CC&Rs (covenants, conditions & restrictions, such as the rules of a homeowners’ association). The title commitment document addresses all of this information in three sections, called Schedules.

  • Schedule A – Schedule A contains basic information about the real property and transaction: The purchaser and mortgage lender, legal description of the property, the effective date of proposed title insurance policy, along with the type of policy, coverage amounts and current title vesting (ownership).
  • Schedule B-I – Schedule B-I lists all of the requirements that need to be met before the property title is considered marketable, and the insurance policy can be issued to the buyer (proposed insured). This might include things like the deed from seller to buyer, mortgage documentation between buyer and lender, satisfaction or release of any liens, corrective deeds from prior owners, or probate for a deceased owner.
  • Schedule B-II – Schedule B-II specifies items that the title insurance policy will not cover: The exceptions. There are standard exceptions for issues like unrecorded easements, encroachment, rights of tenants who occupy the property, and municipal liens. There may also be property-specific exceptions for things like CC&Rs, recorded easements, or agreements with utilities.

Real Estate Lawyers Help You Deal With Those Requirements and Exceptions 

An experienced real estate lawyer can help ensure you are aware of any issues in your title commitment that may delay closing and receive a title policy that best protects your interests.

Often they can also help you exercise your rights under the sales contract to require the Seller to resolve the title issues or have some of the listed exceptions covered by the title insurance policy. The real estate lawyers at Overstreet, Miles, Cumbie & Finkenbinder help buyers and sellers in Kissimmee, St. Cloud, and throughout Osceola County make fully informed choices for successful transactions. Give us a call at 407-847-5151 or contact us online to schedule a consultation and we’ll let you know how we can help you get what to expect from your real estate transaction, without unwelcome surprises.

One question most often asked of those who practice real estate law is whether a limited liability company (LLC) or a Land Trust offers better protection for our clients’ Florida real property investments. If you’re wondering whether you need this type of asset protection, or which type of entity structure offers the best benefits for your specific situation, you’ll get invaluable answers and advice by consulting a real estate attorney before you make your decisions.

Do I Even Need To Form A Business Entity To Protect My Real Property Investment?

In a word: Yes. There are many reasons to hold title to your investment property under a separate entity like an LLC or Land Trust, but the simplest way to sum them all up is the concept of liability. Generally, unless you form a separate entity to hold title to your property, you are personally liable for it, which means your personal assets like your home, savings, and wages are fair game in the event of a judgment against you for an incident related to that property. Some property owners choose to purchase liability insurance because it’s relatively affordable and simpler than forming a separate entity, but too often, those owners discover too late that their policy limits were not sufficient, and their personal assets are still on the table.

Florida Limited Liability Company (LLC)

For some real property investors, forming an LLC is the right call. Placing the property title under the ownership of an LLC removes the risk to the owner’s personal assets, because the LLC is the legally liable entity, instead of the owner as an individual. An LLC also offers some tax advantages over a Land Trust. In the case of a single-member LLC (one owner), the IRS treats the income from the LLC the same way it would a sole proprietorship, which means that the owner pays the income and capital gains taxes as an individual. This is called pass-through taxation. Multi-member LLCs file informational tax returns, but the actual payment of the taxes are made by the individual owners, each paying the tax for the portion of the LLC they own at their individual tax rates. There is no additional taxation for the business entity.

Florida Land Trust

A Land Trust, not to be confused with a living trust, works much differently; essentially, it’s a way to hold the title for real property by means of a contract known as a Land Trust Agreement. Because the Land Trust Agreement is not required to be filed with the state as an LLC would, and the public records show the name of the trustee as the property owner, a Land Trust offers more privacy and anonymity than an LLC. In some cases, property held by the trustee of a Land Trust may be eligible for homestead exemption, where land held in an LLC is not. Land Trusts also offer the ability to avoid probate and other debt obligations.

While Land Trusts may appeal to many investors, they are complex and must comply with the Florida Land Trust Act. Failure to comply with the Act may create unintentional title issues.

Consult an Experienced Real Estate Attorney

The attorneys at Overstreet, Miles, Cumbie & Finkenbinder serve the needs of property owners and real estate investors throughout Kissimmee, St. Cloud, and Osceola County. If you’re new to real estate investing or need advice before you select a business entity to best protect you real property investment and personal assets, call or contact us online for a consultation. Our experienced real estate attorneys will explain your options and help you set up the right entity structure for your specific situation and goals.

Commercial leases are far more complex than residential leases, and there are more ways for an inadequate commercial lease agreement to become a costly problem. Having an experienced real estate attorney draft a commercial lease specifically for every tenancy ensures that all of the terms in your lease are enforceable, and that all the bases are covered in terms of protecting your rights, interests, and property while observing the legal rights of your tenants.

Protect Your Rights & Interests

Depending upon the type of property you’re leasing and the intended uses of the tenants, your commercial lease agreement may need to include things like terms for, or prohibition of, subleasing; requirements for indemnification, insurance, and mediation/arbitration; payment of property taxes that arise from improvements made for or by the tenant; and terms for modifying the rent over the life of a long-term lease.

Protect Your Property

If your tenants are permitted to make improvements or modifications to the property, your commercial lease agreement needs to lay out any restrictions, the process for approval of those improvements, a clear statement of who is responsible to maintain and repair those improvements, whether the tenants must remove any improvements at the end of their tenancy, and what happens if their improvements or general use of the property result in damage.

Use A Commercial Lease That Covers Your Specific Situation 

A commercial lease is a legal contract, and it’s only useful if its terms are enforceable and specific enough to cover problems that arise. Some commercial landlords try to save money by using boilerplate commercial leases downloaded from the Internet. Unfortunately, we don’t know what we don’t know until it’s too late, and sometimes, property owners who take a DIY approach to drafting leases can find that those contracts didn’t cover all the bases. That can be an expensive problem.

Working with the experienced real estate attorneys at Overstreet, Miles, Cumbie & Finkenbinder to draft an effective, enforceable commercial lease is a small investment that protects your property and interests against costly issues. Call us or contact us online for a consultation, and we’ll help you create the right commercial lease for your property and tenants.

It’s a common practice for residential landlords to use a boilerplate lease as a contract between them and their tenants. These generic forms are readily and cheaply available online, and most of them do cover the minimum requirements for a legal lease agreement. Unfortunately, they often fail to cover some specific points that can provide much more precise terms and better legal protection for property owners, while observing the rights of the tenants under state law.

Are The Terms Of Your Lease Enforceable?

Typically, landlords want to make a lease agreement that favors protecting their own interests, but not every term you include in such a contract is legally enforceable. For example, you may be allowed to specify fees for late payment, but they have to be kept within what courts consider to be reasonable limits. Having an experienced real estate attorney draft your residential lease ensures that your terms are within Florida’s legal limits, while providing you with the best protection possible.

Does Your Lease Cover The Specific Circumstances? 

Generic lease forms are designed to cover the most common conditions encountered in leasing a home to tenants. Every tenancy and every property is unique, and it’s in your best interest as a landlord to make a lease agreement that covers issues that may arise with each specific property and tenant. For example, if you’re leasing out a home with solar panels, which are not typically mentioned in a generic lease, whose responsibility is it to keep them clean and maintained? What if the tenants plan to bring their own aboveground hot tub? Does the lease specify that they’re responsible for any damage to the electrical or plumbing systems, or due to leaking water from their hot tub?

Use A Residential Lease That Covers Your Assets 

The real estate lawyers at Overstreet, Miles, Cumbie & Finkenbinder are thoroughly knowledgeable in Florida landlord/tenant law, and they can help you draft a residential lease that is the right fit for your property and tenant situation. Give us a call or contact us online to schedule a consultation and review of your residential lease, and we’ll work with you to effectively protect your rights and property.

Sometimes, homeowners want to consider the idea of adding a family member or someone else to the title deed of their property. Often, this notion is based on the idea that making that person an owner of the property now will help make succession easier later on. While that may be true in some cases, there are significant risks and liabilities associated with adding someone’s name to your property deed.

Potential Loss Or Reduction Of Homestead Exemption 

The Florida State Constitution, Article X, Section 4, exempts properly designated homestead property from forced sale under process of any court. This exemption was created to prevent people from losing the homes they live in to creditors and allows homestead property to be transferred to your spouse and/or children free from creditor claims upon your death. If the person you add to the deed for your primary residence does not live there (for example, an adult child), your homestead exemption is reduced by half, because there are now two owners, but only one of them resides in the house. Adding a non-resident to the title weakens your Homestead Exemption protection.

Financing & Tax Issues

 If your home is mortgaged or you’re using a HELOC (Home Equity Line Of Credit), you may discover that it violates the terms of that mortgage or HELOC to transfer interest in the home to another person by adding them to the property deed. Even in cases where the lender allows such a transfer, you may owe money for new documentary stamps. If you later want to sell or refinance the house, you will need signatures from every person named on the property deed. If your co-owners don’t agree to the sale or refinance, you’re either going to be stuck, or facing the prospect of taking them to court. Finally, it is likely that the person you add to the property deed will ultimately pay more income tax when the property is sold after you are deceased because they lose the stepped-up tax basis they would have had if they’d inherited the property through probate or a trust.

Potential Liability

When you add someone to the property deed of your home, the home becomes that person’s asset, in addition to being yours. That means that if your new co-owner files bankruptcy or has a judgment filed against them by a creditor, the house is an asset that can be encumbered by their creditors, despite the fact that it’s your primary residence.

Keep Your Homestead Exemption Protection Intact

The relative simplicity of adding your heir’s name to the property deed for your home may seem appealing, but for most people, it’s not the best solution. The real estate attorneys at Overstreet, Miles, Cumbie & Finkenbinder can help you find the option that best protects you and your assets now, and eases the cost and hassle of succession for your heir later on. Call us or contact us online for a consultation, and learn more about your options.

“What are my closing costs” is one of the most common questions when buying and selling real estate. While the sale contract breaks down the list of closing costs, fees, and charges for each party, it remains of the most mysterious sections of the contract. That’s because the elusive “closing costs” vary based on the sales price of the property, the type of loan you choose, and the state or county where the property is located.

Typical Closing Costs For Sellers:

  • Applicable Documentary Stamp Taxes
  • Owner’s Title Policy and Charges (depending upon contract terms)
  • Municipal Lien Search
  • HOA/Condo Estoppel Fees
  • Recording and any other fees required to provide marketable title
  • Seller’s Attorney Fees

Typical Closing Costs For Buyers:

  • Documentary Stamp & Fees On Promissory Notes
  • Recording Fees For Deed & Financing Statements
  • Owner’s Title Policy and Charges (depending upon contract terms)
  • Property Survey, if Required
  • HOA/Condo Association Transfer/Application Fees
  • Municipal Lien Search
  • Loan Costs like origination, appraisal, inspection, and credit reporting fees
  • Buyer’s Attorney Fees

Why Are Some Fees Listed Twice?

In some cases, the fees are negotiable, either in terms of who pays them, or in terms of the amount to be paid. In general, sellers pay all the fees required to remove any encumbrances on the title and their own legal costs, while buyers pay the fees associated with financing and transferring the property title. The party paying for the title insurance chooses the closing/title agent, which gives some measure of control over that cost. However, many of the fees are regulated by state law, such as title insurance premium, documentary stamp taxes, and recording costs, will not change.

Having a real estate attorney on your side can help you negotiate a more favorable result and gives you added protection against surprises, like finding a previously undetected encumbrance on the property or learning after the transaction is over that there are zoning or land use controls that prevent you from using the property the way you wanted to.

Keep Closing Costs To Your Fair Share

When you work with the real estate attorneys at Overstreet, Miles, Cumbie & Finkenbinder, you place yourself in a better position to negotiate your fair share of closing costs and can rest assured that your real estate purchase contract is not going to come back to bite you later. Call or contact us online to schedule a consultation, and we’ll let you know how we can help in your specific transaction.

The Florida Documentary Stamp Tax is imposed on documents transferring an interest in real estate, but in many cases, people are unaware of this tax and how it may apply to their real estate transaction, and they’re surprised with an unwelcome extra expense when it comes time to record the property deed. Interest and penalties for not paying this tax are steep, so it’s critical to understand and plan for documentary stamps.

When Does The Documentary Stamp Tax Apply?

The document stamps are actually an excise tax on the documentation that transfer interest in real property and written obligations to pay. Therefore you’re paying tax on the property deed, the mortgage, or some other kind of promissory note. Documentary stamps are typically paid at the time the document is recorded. But unrecorded documents may also be subject to the tax, unless the transaction or party is exempt.

For transactions that don’t involve financing, the Document Stamp Tax for recording the property deed in most counties is 70 cents per $100 of the sales price (known as consideration). This includes quit claim deeds between spouses and family members.

For financed transactions, the documentary stamp tax is 35 cents per $100 of face value on the note; the tax is based on the amount financed, not the selling price. There is an additional “Intangible Tax” of 20 cents per $100 financed, which has to be paid before the mortgage is recorded.

Examples of Documents Subject to Tax:

  • Deeds (e.g., warranty, special warranty, quit claim, trustee’s deed, life estate deed)
  • A document that transfers property between spouses
  • Agreement/Contract for Deed
  • A document that transfers a mobile home as real property
  • An assignment of a leasehold interest in real property
  • Certificate of Title
  • A document that transfers a cemetery lot or interment rights
  • A deed in lieu of foreclosure

When Do Exemptions Apply?

Some exemptions apply to the Document Stamp Tax including:

  • When a property owner wants to transfer ownership from their personal assets to a Limited Liability Corporation they own;
  • When property is transferred between spouses and there is no mortgage;
  • In certain cases of property being transferred into a trust;
  • Or between ex-spouses for up to a year after their divorce becomes final.

Need Help With Documentary Stamp Tax?

The real estate attorneys at Overstreet, Miles, Cumbie, and Finkenbinder are highly experienced in dealing with the intricacies of the Florida Documentary Stamp Tax laws. Give us a call or contact us online, and we’ll schedule a consultation appointment and let you know how we can help!

When you are involved in a residential or commercial real estate transaction in Florida, it’s important to understand what a real estate attorney can to do to actively protect your interests, prevent mistakes, and solve issues that could delay your closing. Working with a real estate attorney helps you stay on top of all the details of your life-changing investment and makes your transaction as painless as possible.

Find & Resolve “Hidden” Issues

When you purchase real estate, a title agent will search the property title for things like liens, and verify that the seller is the rightful owner, entitled to sell you the property. The results of this search are provided to the parties in a title commitment, which is one of the most important documents in the closing process. The vast majority of buyers do not know what a title commitment is and therefore don’t bother to review it. Hiring a real estate attorney to review the title commitment can alert you to issues before you purchase the property. In many cases they can help resolve these issues before the closing. Otherwise, you may not be aware of title issues that could cost you money later on: Issues like liens, easements, or deed restrictions. A real estate attorney can serve as the title agent too. 

Gain A Clear, Accurate Understanding

 Real estate contracts are incredibly complicated, and it’s critical that you understand everything you’re committing to, both rights and obligations, before you sign. When you hire a real estate attorney to review the documentation and contract for your potential purchase, you add a layer of protection and peace of mind. Your real estate attorney will review all the terms and contingencies, explain anything you don’t understand, and advise you if they find issues that work against your best interest. Another benefit to having an attorney review the title and contract is that they can let you know if there are any land use controls or zoning issues that could affect your future plans for the property.

Added Protection For Short Sales & Foreclosures 

Short sales and foreclosures can offer buyers excellent value, but that value is not without risk. When you’re dealing with bank-owned property or property that the lender has agreed to allow to be sold for less than the seller owes, there are some potential pitfalls. Hiring a real estate attorney helps ensure that you’re not stuck in a situation where the seller doesn’t actually have the lender’s permission for a short sale, or the lender is able to come after you for the shortfall later, or you’re dealing with liens or other encumbrances that transfer with the property title.

Experienced Real Estate Attorneys In Florida 

The real estate attorneys at Overstreet, Miles, Cumbie & Finkenbinder are highly experienced in helping Florida real estate buyers and sellers protect their interests and investments. Call us or contact us online for a confidential consultation, and we’ll let you know what to expect and how we can help!

Sometimes it becomes necessary to remove a person’s name from a property deed. This often happens in cases of divorce or death. Although it might seem like removing someone from a deed would be a simple process, it’s actually a complicated matter that is best left to a real estate law attorney.

Deeds of Conveyance

A deed establishes the legal owners of a property. Whoever is named on the deed is considered the owner of the property. In order to change legal ownership of a property, it must be transferred, or conveyed, by the owner to another person through a deed of conveyance.

There are two types of deeds of conveyance: quitclaim deeds and warranty deeds, but which one is better suited for the transaction depends on how the property is held and the purpose of the change in ownership.

Both quitclaim deeds and warranty deeds indicate that the seller/grantor has ownership of the property and a right to transfer their ownership to the buyer/grantee, but they do not provide similar levels of assurance. Quitclaim deeds provide no assurance that there isn’t another person who may also have claim to the property. This makes them a riskier choice in most situations.

Warranty deeds, on the other hand, do provide explicit assurance to the buyer/grantee that there aren’t any other people with claim to the property. That’s why warranty deeds are the most commonly used deed in typical real estate transactions.

Ownership Type Affects Deed Choice

Property can be owned by multiple parties or title may be held in different ways that affect the ownership rights. The type of property ownership determines how the property may be transferred via deed. Types of property ownership include:

  • Sole Ownership. One person owns the property.
  • Joint Tenancy. More than one person owns the property.
  • Rights of Survivorship. More than one person owns the property and each is entitled to inherit an equal share upon another owner’s death.
  • Tenants in Common. More than one person owns the property but none of them inherit any shares upon the death of another owner.
  • Tenancy by entirety. Two people own the property. They inherit each other’s shares upon the other person’s death.

Best Deed Choice Per Property Type

In general, warranty deeds are better in situations with multiple owners, in transactions between strangers, when money changes hands, and in any situation where the buyer wants assurance that the property is free from the ownership interests of other parties.

Quitclaim deeds are a better choice when property is being transferred between family members and no money changes hands. A good is example is siblings inheriting their parent’s property. A quitclaim deed can be used to establish the children as the new owners of the property by removing the deceased parents’ names from the deed. See our blog on additional consideration when using quitclaim deeds

Removing Names From Deeds Is Best Accomplished With Legal Assistance

There are several requirements that must be followed in order to legally remove someone’s name from a deed. Deeds are only valid if they are properly executed and delivered. In Florida, they should also be recorded with the local county clerk’s office.

Both types of deeds must name the grantor and grantee, include the date of transfer, the reason for the transfer, a legal description of the property, and the form of ownership, to name just a few of the requirements. They must also be signed in front of a notary public.

As you can see, transferring property is a complicated process in Florida and a misstep at any point in the transaction can invalidate the deed and impact the legal ownership of the property. In some cases, do-it-yourselfers have found themselves in trouble later on because there was a simple error on the deed.

A real estate attorney can ensure all processes are followed correctly and the new deed is valid, establishing proper legal ownership. Contact a real estate attorney at Kissimmee’s Overstreet, Miles, Cumbie & Finkenbinder, P.A. for advice on removing someone’s name from a deed or any of your other real estate law questions.

Call 407.847.5151 to arrange a consultation.

Deciding to buy a home is the largest investment most people make in their lifetime. Unfortunately, many homebuyers do not understand the terms of the paperwork they sign in the process. If homebuyers aren’t savvy, they can end up among those facing legal disputes over home purchases. Here are 3 ways to protect yourself from common pitfalls:

  1. Don’t Take Your Purchase Offer Lightly.

When you submit an offer on a home, you are agreeing to enter into a legally binding contract (if the seller accepts). While there may be contingencies that allow you to terminate the contract, once signed, it can be difficult and expensive to get out of.

A real estate agent can help you fill out a standard offer contract. It is wise to also have a qualified real estate attorney review the offer before it is submitted. A real estate attorney can advise you on your legal rights and obligations under the purchase offer and help you change the terms to best protect you.

  1. Take Advantage Of The Inspection Period.

This is one of the most important steps in the transaction. The Inspection period begins as soon as the seller accepts your offer, allowing you a set number of days to complete the inspection and determine whether you will move forward with the home purchase. While a seller must legally disclose any “known defects” to a buyer, in Florida it is the homebuyer’s responsibility to have the home inspected to discover any issues that may be present in the home.

Hire a qualified home inspector. A home inspection may reveal defects that change your decision to purchase the home and save you from costly repairs.

  1. Don’t Forego Title Insurance.

As part of the real estate transaction, a title agent or real estate attorney will complete a title search to review the “title” to the property that is being purchased. They will ensure that the property is free from encumbrances, liens and defects. The title agent or real estate attorney will then issue a title insurance policy insuring that it will compensate the insured if a defect, lien or encumbrance is uncovered later. Common title issues include unknown liens, deed fraud and boundary disputes. Don’t leave your property at risk, purchase title insurance.

Jennifer R. Bondy
Partner
Overstreet, Miles, Cumbie & Finkenbinder P.A.