A Brief Introduction About the Florida Real Estate Contract
The Florida real estate contract is a document that is used to outline the terms of a transaction between the seller of residential property as well as the buyer. The terms of the contract shall be negotiated by the two parties, and also the price. After the Florida real estate contract document is signed, the agreement could only be terminated if both parties agree. Florida, like most states, needs sellers of residential real estate to inform potential buyers of the state of the property, that is, issues, shortcomings, and any additional flaws that may affect the property’s value.
There are three main types of real estate contracts in Florida, that are used by real estate professionals, namely; The Florida Realtors (FR) Contract for Residential Sale and Purchase (CRSP-15), The Florida Realtor /Florida Bar Association (FR/BAR) Contract for Residential Sale and Purchase, and the FR/BAR “As-Is” Contract for Sale and Purchase.
The FR/BAR contracts are standardized contracts that simplify the procedure by making the contract easy to read and review by individuals who are familiar with the standard provisions.
The FR/BAR contracts are the most normally used, and there is a benefit to using the standard FR/BAR or the FR/BAR “as is,” depending on whether you are the buyer or the seller.
Who Takes the Florida Real Estate Contract?
The purchases and sales of real estate in Florida are controlled by the Florida Real Estate Commission, and real estate transactions need a written contract. If there is a sale of a Florida home or condo, at least two individuals are involved: a seller and a buyer. Also, there might be several owners who are required to sign the contract to have a binding agreement.
Purpose of the Florida Real Estate Contract
A Florida real estate contract is a legal agreement that covers the material terms and conditions of your real estate transaction. A real estate contract, also recognized as a purchase and sale agreement, is a lawfully binding agreement between the buyer and seller. The purpose of a real estate purchase and sale agreement is to state the terms and conditions of the sale made between the parties.
Contents of the Florida Real Estate Contract
The content of Florida Real Estate contract is;
The FR/BAR Contract
The FR/BAR contract covers provisions relating to the purchase price, closing date, and other associated information, which includes important financial and inspection contingencies. The satisfaction of these contingencies is what eventually dictates if the sales transaction is finished.
Key Points of Florida Real Estate Contract
- Personal Property included in the Purchase Price: Personal property is an asset that is not lastingly fixed to one location. It is standard in the agreement for appliances, ceiling fans, intercoms, light fixtures, storm shutters, garage door openers, as well as window treatments to be included in the purchase cost. If any additional personal property items are desired with the sale, they should be written in the blank provided on the contract.
- Initial Deposit: A deposit is given by the buyer towards the seller to show the buyer’s good faith as well as to bind a purchase offer.
- Additional Deposit: To make an offer more attractive towards the seller, there is an option to give an additional deposit within a certain number of days after the effective date.
- Time for Acceptance of Offer and Counteroffers: This is the “deadline” given through the buyer towards the seller to respond to the offer utilizing either acceptance or counteroffer.
- Closing Date: The date the title shall be transferred and the money exchanges hands. Most financing offers usually offer a closing date between 30 and 60 days after the effective date.
- Occupancy and Possession: This clause makes sure that at closing, the seller would deliver possession of the property towards the buyer and the buyer would receive the property free of any tenants and personal items.
- Financing: The clause specifies that the contract is contingent upon the buyer obtaining a written loan commitment for the specific loan type within a specified number of days after the effective date (generally 45 days).
- Closing Costs: Outlines the closing costs that shall be paid by the buyer and the seller.
- Title Evidence and Insurance: The buyer should receive a title insurance commitment before the closing date, generally at least 15 days before.
- Property Maintenance: Seller must maintain the property in the condition existing as of the effective date of the Florida real estate contract.
- Property Inspection and Repair: It specifies that the buyer has a certain number of days after the effective date (generally 15, but less is written in to make offers more attractive) to carry out all inspections and to deliver the written inspection report towards the seller. The buyer has the right to request the seller to make any maintenance necessary (within the General Repair Limit stated in the Florida Real Estate contract) to bring the property up to the required condition.
- Required Condition: The ceiling, roof, exterior walls, as well as interior walls, doors, windows, and foundation, should be free of leaks and damage. The pool, pool equipment, major appliances, heating, cooling, mechanical, and electrical, security, sprinkler, septic and plumbing systems, seawalls, and dockage should be in working condition. Torn screens, fogged windows, and missing or damaged roof shingles or tiles are required to be repaired or replaced by the seller before closing.
- Default: If the buyer does not carry out their obligations under the contract, the seller has the right to retain the deposit. In case the seller does not carry out their obligations under the contract, the buyer would receive a return of their deposit and might seek damages from the seller by dispute resolution.
- Title: In a Florida real estate contract, the seller must provide evidence of good and marketable title (a title that is free and clear of any and every objectionable liens or other title defects).
- Time: Calendar days are utilized in the Florida real estate contract to compute periods. In case any periods specified in the contract (except for Time for Acceptance of Offer and Effective Date) happen on a weekend or national legal holiday, the period would extend to 5:00 PM on the next business day.
The FR/BAR “as is” Contract
The “as is” contract covers the same clauses as the FR/BAR contract, but has a major dissimilarity. The contract provides the buyer with a stated inspection period (the default is 15 days, but it may be more or less, relying on the offer) to get all inspections completed of the property. During that timeframe, the buyer has the sole discretion to decide if the property is acceptable to them. In case the property is not acceptable toward the buyer, they could ask the seller to lower the purchase price or to issue a credit at closing to cover up the cost of their desired repairs. In case the seller refuses, the buyer has the alternative to withdraw from the deal without losing the deposit. The buyer is not required to provide the written inspection report toward the seller.
Though, the “as is” contract doesn’t alleviate a seller from making mandated disclosures relating to the property to prospective buyers. These disclosures comprise the existence of: any potential or actual claims, grievances, or lawful proceedings that affect the property, any boundary disputes, any environmental risks, any damage or infestations from termites or other pests, any issues with essential components such as HVAC, roof, plumbing, electrical, etc., and any condominium or home owner’s association rules that need compliance.
How to Draft the Florida Real Estate Contract?
The Florida, Real Estate contract, must be made in writing and signed by both the parties (buyers and sellers) to the contract, and comprise an offer to sell or purchase, an acceptance of the offer, the sale price, and a sufficient description of the property.
The Florida Real Estate Contract should include the following necessary elements:
- The contract should be in writing
- Names of parties involved in the contract
- Address and legal description of the property being sold or purchased
- Purchase price
- Acceptance as well as counteroffer period
- Closing date
- Default or dispute resolution
- Special terms and conditions, if any exist
- Signatures and initials of buyers and sellers in every relevant section
- Contingencies (if applicable; that is financing, inspection)
In the Florida Real Estate contract, if you are buying or selling a home and desire to handle the transaction on your own, you could access both types of FAR/BAR contract online, and utilize either the digital version or hard copy. Though, you must be using the most recent version.
Benefits and Drawbacks of the Florida Real Estate Contract
In the Florida Real Estate contract, in case the buyer agrees, you also have the choice of selling your home “as-is.” That includes that the buyer agrees to take the property in its existing state without your having to make any further repairs or improvements to it.
In the Florida Real Estate contract, a so-called “as-is” clause doesn’t relieve you from your disclosure responsibilities under Florida law. You would still require advising buyers of all material defects that you recognize concerning the property.
When you are buying a home in Florida, conventional real estate contracts present more protections, so those are the favored option.
[Also Read: Florida Lease Agreement]
What Happens in the Case of Violation?
The Florida law, real estate law, as well as contract law, offers the sellers with a range of legal remedies.
In the Florida Real Estate contract, when a buyer violates a real estate contract(1), a seller should decide whether to close the transaction, look for specific performance of the agreement or seek out financial damages for the breach. The choice to sue for violation of the sales contract is known as a remedy “at law.” The option to compel the buyer to go through with the purchase of the property is known as a remedy “inequity.”
As per Florida law, when a buyer doesn’t fulfill any responsibility under a contract or doesn’t take any steps towards finishing a deal, the seller might be able to claim that the buyer has abandoned the contract.
In the Florida Real Estate contract, the FR/BAR “As Is” Residential Contract for Sale and Purchase of Florida residential real estate is an outstanding tool for home sellers, attorneys, as well as real estate professionals. Because of the Property Inspection and Required Condition clauses, the FR/BAR Contract is the most beneficial contract for you, as a buyer, to make use of when presenting an offer. Though, in the Florida Real Estate contract, the seller has the right to decline any offers offered on this contract and require the use of the “as is” contract if they decide.