Buying a house is a milestone for many people. While the market may fluctuate, hopes and expectations stay consistent. We all want a transparent purchase experience with no surprises. Is that too much to ask? It shouldn’t be.
Melbourne is one of the best places to live in Florida, and with a hot local housing market, you will find your dream home. Residential real estate contracts in Florida generally come in two forms. These two contracts are approved by the Florida Association of Realtors (FAR) and the Florida Bar Association (BAR). There is a specific form for Florida buyers and sellers to use for a standard agreement and another form for an “As-Is” real estate transaction.
Real Estate Contracts
Residential Contract for Sale and Purchase (Standard Contract)
As-Is Residential Contract for Sale and Purchase (“As-Is” Contract)
Florida does not require a specific type of contract for real estate transactions, however, the forms created and approved by the FAR and BAR are the most utilized. Each form outlines the responsibilities of the buyer and seller. The “As-Is” contract is commonly used over the standard contract, but special care should be taken when deciding to enter an “As-Is” contract.
What is Included in a Real Estate Contract?
Above all, a real estate contract is a legally binding agreement between the buyer and seller. The document clearly outlines the terms and conditions of the sale for both parties, including required disclosures. From the time you are ready to make an offer until closing, take the extra step to protect your investment by bringing a Real Estate Attorney to the table with you.
A Standard Contract is not always the best option for a real estate transaction. Even if you are told the terms are “standard,” you need to protect your interests. The bottom line is that everyone walks into a real estate sale with different, and often competing, interests. Let your Real Estate Attorney represent your interests and decide which contract is most favorable for your situation.
Required disclosures:
- Potential or actual claims, complaints, or legal proceedings affecting the property
- Any boundary disputes
- Any environmental hazards
- Any damage or infestations from termites or other pests
- Any potential or actual damage from sinkholes, past or present
- Problems with essential components, including HVAC, roof, plumbing, electrical, etc.
- Any condo or homeowners association rules that require compliance
Why Use a Real Estate Attorney for an As-Is Contract?
In a Standard Contract, there is a section that details repairs and agreements regarding who will pay. The “As-Is” Contract removes that section because the buyer is receiving the property just as it is, and the seller is not involved in repairs. If the property satisfactorily passes inspection, the buyer is on their own.
What could go wrong? For the buyer, if their lender requires repairs to be made, they will be responsible for paying all repair costs themselves. In a Standard Contract, the buyer and seller negotiate repair costs and either lower the sale price or give a credit at the closing to cover agreed-upon repair costs. If you are buying “As-Is,” all repairs are your financial responsibility.
1. A Real Estate Attorney negotiates the contingencies that are best for the buyer.
Contingencies are very common in real estate contracts. These little additions to a contract can create unique challenges for both buyers and sellers. The possibilities of contingencies are endless. Therefore, it is important to understand what contingencies have been added to your contract and how they will impact your timeline.
Common Contingencies
- Financing
- Home inspections
- Appraisal
2. If you don’t know the rules of disclosure, get protection from a Real Estate Attorney.
Sellers in Florida are not expected to guarantee that their property is free of defects. There can be defects that are unknown to home sellers that may ultimately end up costing the buyer time and money to correct. Selling a home “As-Is” does not relieve the sellers of the responsibility of disclosure and, as a buyer, having a Real Estate Attorney involved to evaluate all disclosures goes a long way toward peace of mind.
However, an “As-Is” Contract can also protect the seller in the event of an unknown defect. For example, if the sale of the house is completed in the winter and it is unknown that the air conditioner does not work, an “As-Is” contract will help protect the seller. A previously undiscovered defect that is discovered after the sale is final is not the responsibility of the seller.
3. A Real Estate Attorney communicates and negotiates important repair information.
If you are purchasing an “As-Is” home, your Real Estate Attorney can review the required disclosures and home inspection to ensure an “As-Is” contract is in your best interest. As an “As-Is” buyer, you have the right to arrange for inspections of the property during the inspection period and potentially terminate the contract if the property is unacceptable. The buyer in an “As-Is” contract can make a demand for repairs and price concessions and even terminate the contract if the seller does not agree. A Real Estate Attorney can negotiate on behalf of the buyer, communicating requirements and updating the sales contract with new agreements.
4. Don’t get tripped up on small print details included in the essential paperwork.
Closing should be the big celebratory moment! Don’t let vague or confusing language in the contract set you up for major disappointment in the future. A contract that lacks clarity can be subject to interpretation in the future, leaving room for not only disappointment but unexpected costs. Your Real Estate Attorney will review closing paperwork and other documents for clear language, saving you from making costly mistakes.
Can I Write My Own “As-Is” Contract?
You can, but it’s not wise. There is an incredible amount of detail contained in a real estate contract. As with any legally binding document, having a professional represent you in the negotiation and execution of a contract that results in a sizeable investment is always in your best interest. There really is no substitute for an experienced Real Estate Attorney in contract matters, even if the documents appear simple.
Whether you are using the Standard or “As-Is” form, any information that is incorrectly captured on the form can impact your purchase and be difficult, if not impossible, to correct. From documenting proper names to listing the items that are to be included in the sale of the house (items to convey), the real estate contract needs to be on point at the time of signature by the buyer and seller.
Common Costly Errors
- Using proper names
- Resale contingency
- Items to convey
- Seller concession paragraphs
Entering a real estate contract doesn’t have to be an overwhelming experience. Take knowledgeable professionals with you and make sure your interests are protected. It is always a good idea to have a Real Estate Attorney review a Standard Contract, but if you are entering an “As-Is” Contract, an attorney becomes a must-have.
If you have any questions or concerns about As-Is Contracts or whether or not you should sign your real estate contract, don’t hesitate to contact Lacey Lyons Rezanka . Schedule a consultation today!