Florida Real Estate Contracts

Now I will walk you through the standard contract for sale and purchase approved by both the Florida Association of Realtors and the Florida Bar, simply referred to as the “FAR/BAR contract.”

This by no means should be construed as a complete contract or explanation of it, nor is this legal advice. What I want to do is highlight the major sections of the contract so that when you find your dream home and this contract is placed in front of you, you will hopefully feel a little more comfortable with it.

Please also note that this contract will not always be the contract used. For example, new home builders in Florida retirement communities typically have their own contracts. It is, however, the contract most commonly used in Florida today.

Demystifying the Florida Contract for Sale and Purchase

Lines 1 through 15

These have blanks to be filled in with the seller’s name(s) and buyer’s name(s), the legal description and address of the property, and items of personal property that are included and excluded from the sale. This section also has legal verbiage stating that the “seller shall sell” and the “buyer shall buy” the property in question.

Lines 16 through 24

This section covers the purchase price, how much deposit is given (including where the deposit is to be held, which is usually a brokerage escrow account, title company, or attorney’s escrow or trust account), how much financing the buyer is going for, and how much money will be required at closing.

Lines 25 through 32

Include the time for acceptance of the contract as well as the effective date (the date when both parties came to an agreement and entered into a bilateral agreement). The buyer will typically make an offer, and the seller will have a certain amount of time to agree to the terms or make a counteroffer. If the seller fails to respond in the allotted time frame, the offer can be withdrawn and the deposit returned if the buyer so desires.

Lines 33 through 49

Cover financing. If the buyer is paying cash, there are no contingencies for financing. If you are getting a mortgage to pay for part of the purchase, you should make the contract contingent (check line 35) upon you applying for and receiving this mortgage.

Lines 50 through 55

Include when you will receive the title insurance policy and who will pay for it. Customarily the seller pays, but this is a negotiable point and the buyer is sometimes asked to pay.

Lines 56 through 58

Outline the closing date. This is a date mutually agreed upon and negotiated between the seller and the buyer. Something that comes up from time to time during hurricane season is that an insurance company might not write an insurance policy on a home you are buying if there is a hurricane, tropical depression, or tropical storm within so many miles of Florida. In the case of this, the closing may be legally delayed for up to 5 days after the coverage becomes available again.

Lines 59 through 65

Explain that the seller will provide you with “marketable title” subject to certain restrictions, easements, and limitations. The seller is also stating that there are no violations that would prevent you from using the property for your specific purpose, usually as a residence.

Lines 66 through 69

Discuss occupancy, and basically states that you the buyer, will get occupancy at the time of closing. This can be modified if you agree to let the seller stay in the home past the closing date.

Lines 70 through 73

Goes over provisions typed into or written into the contract. Also, whether or not you may assign the contract is covered here.

Lines 74 through 90

Cover real estate disclosures. This is a very important section that you should be sure to read. It discusses disclosures such as radon, mold, special assessments, lead based paint, homeowners’ association disclosures, and more.

Lines 91 through 96

This section covers repair costs and home warranties. Here it is spelled out how much of the repairs deemed necessary by the home inspection report the owner is willing to pay for. This includes figures both for damage caused by termites, and for damage not caused by termites. Also, if you will be receiving a home warranty, it is spelled out here what company it will be with, what the cost will be, and who will pay for it.

Lines 97 through 103

Riders, addenda, and special clauses to the contract are discussed here. It is the best practice to have any special typewritten or handwritten clauses added into the contract to be written by an attorney. However, this does not always happen, and problems can sometimes arise even with the simplest of clauses.

Lines 104 through 112

More disclosures, including a statement indicating that by signing you affirm that you have read the Standards for Real Estate Transactions A through Y which I will go over in the next few pages.

Lines 113 through 123

Spaces for the buyer’s signature and seller’s signature, as well as blanks for addresses and phone numbers for notification purposes. Also, any listing or cooperating brokers are listed on the bottom.

“FAR/BAR” Standards for Real Estate Transactions

As previously mentioned, there are 25 “standards” lettered from “A” to “Y” in the standard FAR/BAR contract. Here is a brief explanation of each of them. Once again, you should have an attorney explain to you anything that you do not understand or do not feel comfortable with.

A. Title Insurance

This tells you who must issue your title policy, when you will receive a copy, and what will happen if it is determined that the title is not clear or marketable.

B. Purchase Money Mortgage; Security Agreement to Seller

This only applies in the case of the seller providing you with financing. It tells you what the consequences and timeframes involved are for foreclosure, as well as spelling out the duties of both parties.

C. Survey

This allows for you the buyer, at your expense, to have a state registered surveyor conduct a survey of the property. If you are getting financing, your lender will require this. If you are not getting financing, it is advisable to get a survey done anyway. It is not very expensive and a good thing to have down the road as you will need it if you ever want to get a permit to make changes to your home. The main objective of the survey is to ensure there are no encroachments on the property, which would constitute a title defect.

D. Wood Destroying Organisms

Defines the term “Wood Destroying Organism” and lets you know that you have a right to have a Florida Certified Pest Control Operator inspect the property for their existence. This service is usually piggybacked with the home inspection. Also provides for possible courses of action should evidence of infestation or damage be found.

E. Ingress and Egress

Simply states that you will have access to and from the property for its designated purpose (i.e. to reside there) without infringing on anyone else’s property rights….