In order to help you through your real estate transaction, we have developed a list of “frequently asked questions”. Our responses are based upon title and closing practice throughout Florida and Michigan which may differ from practices in other parts of the country.
If you have a specific question, please submit it in the “Contact Us” section and we will endeavor to give you a response within 24 hours.
Note: Per our lawyers, we must make the following disclaimers:
1) Z!ng Title an amaZ!ng division of Liberty Title Agency may not practice law, so any response to your question should not be viewed as legal advice.
2) Responses are based upon the information submitted to us, so we disclaim any liability arising from your failure to advise us of all the facts/circumstances surrounding your question.
Remember — real estate transactions are major events and you should always consult with your attorney and tax adviser before entering into any binding agreements.
1) What are “closing costs”?
“Closing Costs” is a catch-all term that refers to the costs and expenses involved in closing a real estate transaction. These costs are determined by the contracts between the parties, applicable laws and local customs. The following explanation of “closing costs” is based upon our sample Real Estate Purchase Contract (see the Forms section for a downloadable copy).
2) What is a “tax proration”?
The tax proration is an allocation of the property taxes between the Seller and Purchaser that is determined by their contract. It is not required, but it is customary. In Florida, taxes are due once per year and they cover November 1 thru October 31. The proration, however, is on a calendar year basis which means the proration period is from 1/1 thru 12/31. If the property closes between January 1 and October 31 the seller reimburses the buyer from January 1 through the closing date (buyer credit). If the property closes between November 1 and December 31 the buyer reimburses the seller from the closing date through the end of the year (seller credit).
3) How long before we can close?
The time it takes to get to a closing of a real estate transaction is largely determined by the contract between the parties and the time needed to get lender approval if a mortgage is involved. In a typical residential transaction, most contingencies (other than financing and sale of the Purchaser’s residence) can be removed within two weeks. Financing should be resolved within 30-45 days. Sometimes this can be longer if the financing is FHA.
4) How long will my closing last?
Closing a transaction should not be an ordeal. We typically budget one hour for a residential resale and 30-45 minutes for a refinance.
5) Do I need an attorney?
Probably. Buying/Selling a home is a major event with significant financial and tax considerations. A good Real Estate Attorney will be able to give you critical advice about appropriate contingency clauses, title restrictions and tax consequences of your transaction. (We’ve highlighted Real Estate because you want an attorney who is experienced and current in this area.) The person who wrote your will or handled a “slip and fall” case is probably not the right person to advise you on real estate! Finding an attorney should not be difficult. Ask for recommendations from Realtors, an experienced loan officer or a title company. You can also call the Florida Bar Association referral line at (800) 342-8011.
6) What is escrow?
Escrow is one of those phrases the professionals use to mystify consumers. It is a fluid term with several meanings. The most common are:
- A generic term for the entire closing process
- An agreement to hold funds/documents until certain events have occurred (e.g. we will hold funds “in escrow” until the Seller removes the junk car from the backyard.)
- An agreement to hold deposit for a specific use (e.g. we will “escrow” $150/month for payment of future taxes.)
Don’t let your eyes glaze over when people start throwing around the word “escrow” — look them straight in the eye and ask them what they mean.
7) How much earnest money should we collect?
This is a tough question and the answer varies from case to case, as the “earnest money” serves several purposes:
- Showing the buyer is serious
- A lever to make the Buyer perform
- A form of liquidated damages to compensate the Seller should the Buyer fail to perform
In Palm Beach County, earnest money deposits range from 1% to 4% of the sale price. The deposit is either held by the Buyer’s Realtor or the title company. Interest is not usually paid on the deposit, as the costs of setting up and administrating an interest bearing account usually exceed the interest generated (e.g. $5,000 will earn approximately $20 in interest over a 90 day period). A key point on “earnest money” is unless both parties agree to release the money, the party holding the money will usually decline to disburse. They do not want to be caught in a squabble between Buyer and Seller. Instead, they will usually deposit the money in court and allow the judge to decide who gets the money.
8) Why do I record my deed? Is it my title?
Deeds are recorded to provide notice to the world that you own your property. Recording a deed at the Register of Deeds imparts “constructive notice” to the world that you own your property-everyone in the world is deemed by law to know of your interest. If you fail to record your Deed, only those people who have actual notice of your interest in the property know of your ownership. The deed is merely evidence of your ownership of the property- it is not a “title” like a car title. It is of critical importance that the deed be placed on public record.
9) What are the requirements for recording my deed?
Florida has fairly strict requirements for recording documents at the Register of Deeds Office. The principal requirements are:
- Your document must be formatted correctly:
- A blank space must be available on the top right corner of each page of your document for the Clerk & Comptroller’s official Recording Stamp.
- The first page must have a 3-inch by 3-inch space.
- All other pages must have a 1 ½ inch by 3-inch space.
- A self-addressed postage paid envelope must be provided if recording hard copy documents. It is not necessary to supply one envelope per document if all documents are to be returned to the same address, provided envelopes and postage meet the U.S. Postal Service guidelines.
- Documents will ONLY be distributed to other parties if a self-addressed, postage-paid envelope for each party is included with the request. Otherwise, all documents will be returned to the party submitting the document for recording.
- You must pay the required fees.
The Clerk & Comptroller’s office is unable to accept modified, certified copies of any document for re-recording. We will not record an uncertified copy of any document, with or without changes. If you need to record a document which has changes from the original, please provide either a new document or make the modification to the original document. You must also pay the recording fees which are $10 for the first page and $8.50 for each additional page.
10) What are “Documentary Stamp Taxes and Intangible Taxes”?
Florida levies two types of taxes on the sale or other transfer of real estate. The Documentary Stamp Tax on the Deed is levied by the State at a rate of $.70 per $100 rounded up! On the Mortgage there is both the Documentary Stamp Tax as well as the Intangible Tax. The Documentary Stamp Tax on the Mortgage is $.35 per $100 rounded up to the nearest $100. Intangible Tax is required on obligations to pay money involving real estate. The rate is .002 for each $1.00 consideration. State Doc Stamps and Intangible Tax are required on any Agreement for Deed or Contract for Deed.
Questions to Ask a Title Agent in Florida!
Here are some Key Questions when Selecting a Title / Settlement Agent:
- Beginning inquiry. If a company tells you that CFPB Compliance is not urgent or important, be very concerned as it is YOU who will be penalized!
- NPPI. Non-public personal information. How is the service provider protecting information on a typical loan closing file? Where is this information traveling? Will it be downloaded on personal computers or smart phones for out of office closings? What are their storage procedures? Clean desk policy?
- Escrow Management. How are funds managed? Wiring procedures, segregation of duties and the use of positive pay? Technology protections?
- Insurance. Have you reviewed the company’s E & O and Fidelity Bond? Is it enough coverage? Is it appropriate coverage for a title company?
- New construction. Is the title company strictly following the Florida’s construction lien law to protect the consumer and financial institution against loss?
- Licensing. If you are sending a loan package to an out of state company: are they licensed to do business in the State of Florida? Are they familiar with Florida law?
- Consumer Complaints. Does the title company have an appropriate Consumer Complaint Procedure in compliance with CFPB guidelines?
- Affiliated Agents. If the company insuring your transaction is owned by a Realtor/Broker, Law Firm or other Lender, will your client’s NPPI be properly protected? Are they concerned about your compliance? Are they concerned about the consumer?
- Attorneys. If the agency does not have legal counsel on staff, are they current on consumer protection laws and CFPB positions?