Protecting Your Interests During Real Estate Closings
The sale of Florida real estate signifies a significant financial transaction, often marking a new chapter for sellers. However, navigating the intricacies of closing costs can be a complex and potentially contentious process. It’s no secret that every transaction has closing costs, some of which are paid by the sellers and some of which are paid by the buyer. But who pays for what? A proper analysis pulls from the actual signed contract between the parties, Florida Statutes, and, finally, knowledge of customary industry practices.
Recently, our firm represented a seller in a residential real estate closing in Sarasota. Notably, my firm was not acting as the closing agent, because the buyers selected the closing agent. As usual, we requested and received the draft closing documents from the closing agent (a title company, not a law firm), and reviewed the documents to ensure compliance with the law and our client’s contract with her buyers. Upon reviewing the proposed settlement statement, we were surprised to see that the title agent was attempting to charge our client, the seller, a $450 “document preparation fee.”
Why was I surprised?
This scenario highlights the need for legal representation for sellers of real estate. Paragraph 9 of the standard FAR/BAR contract dictates which party has the right to select the closing agent. Here, the buyers had that right and, along with that right comes the obligation to pay for the owner’s title insurance policy and associated charges. These charges are defined to encompass “closing services.” Although that phrase may seem open-ended, thankfully, Florida Statutes provide us with guidance.
Florida Statutes § 627.7711 specifically addresses title insurance costs. This section defines “closing services” as tasks performed by a licensed title insurer, agent, or attorney related to finalizing a real estate transaction. Per statute, this includes, but is not limited to, preparing “documents necessary to close the transaction.”
In this situation, the title agent prepared the typical closing documents that were necessary to close the transaction. There was nothing unique about the seller and/or the status of title that gave rise to any abnormal requirements in the title commitment. Because of this, the preparation of the standard set of closing documents could not be deemed to be “fees to cure title” (which would have been a seller charge).
Nope – in this case, the closing documents prepared by the closing agent were merely the documents necessary to close the transaction and, therefore, by law, need to be included in the title agent’s “closing fee.” Again, the contract that my client signed with the buyers required the buyer (as the party with the right to select the closing agent) to pay for the closing agent’s services.
So what did I do?
I immediately brought this to the attention of the title agent, and advised that our clients would not pay that fee. The title agent pushed back, but I remained firm. Ultimately, the closing agent removed from the fee from the seller’s side of the closing statement. Victory.
You don’t know what you don’t know.
Selling your Florida property should be a positive and rewarding experience, free from surprises and demand for unnecessary financial burdens. You should not be expected to know the relevant laws and contractual interplay in order to ask for something that you should be receiving. By retaining an experienced real estate attorney, you will have someone looking out for your interests, someone who knows what is right and what is wrong.
The surprise fee that the title agent attempted to charge our client underscores the importance of vigilance during the closing process.
Insult to injury.
Inquiring minds may be wondering… when the title agent was trying to charge my client $450 for “document preparation,” how much were the buyers being charged for the entire closing? Funny you ask, because when I saw it, I asked myself, “What year is it?” Amazingly, the buyers were being charged a closing fee of only $225, which might be the lowest closing fee I have seen in all of my years practicing. And the buyers even had a mortgage. Dang.
Attorney Involvement
As opposed to some other states, parties buying or selling real estate in Florida are not required to have an attorney representing them. This is sometimes taken as an indication that we (attorneys) are not needed, perhaps under the assumption that “Florida has it all figured out” or “the system has been designed so that attorneys are not needed.” Hardly.
When the going gets tough, and you ask your realtor or a title company closing agent for guidance, invariably the first line you will be given is “I’m not an attorney, but…” If you ever hear that line, the very next thing you should ask is for a referral to an attorney. If they tell you that you don’t need one, RUN. FAST. And go looking for an attorney to assist you.
Florida real estate attorneys, especially those who are board certified, are experienced in closing procedures and add a layer of protection that is not otherwise available. Our expertise allows us to identify issues and potential discrepancies, pull from prior knowledge of relevant statutes such as Fla. Stat. § 627.7711, and advocate for you to ensure a fair and balanced closing process, one in which you get what you are entitled to, whether you personally know to ask for it or not.
Choose my firm to help you.
Are you considering buying or selling residential real property in Florida? Whether or not you are working with a realtor, you should always have an attorney representing you. Contact my firm today for a consultation.
Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. Every situation is unique and so prior results do not guarantee future results. Please consult with a qualified attorney for guidance specific to your situation.