Buying or Selling Residential Property in the wake of Hurricane Irma

There are a number of provisions within our standard real estate contracts which most buyers, sellers and real estate professionals typically give little to no thought to. In fact, most attorneys will gloss over certain provisions when making modifications to the contract. In the wake of Hurricane Irma these provisions become critical and will govern when (and in some cases if) closings will actually take place. In a typical transaction our focus tends to be on price, deposit amount as well as inspection and financing periods. If however you have a transaction which was scheduled to close in the week prior to Irma’s impact on Florida or in the week or weeks thereafter, these obscure contract provisions such as “Force Majeure” and “Risk of Loss” will likely impact your transaction.

The focus of this post is to cover some basic questions I have received from various real estate professionals as well as clients whose transactions were disrupted by Hurricane Irma.

•  What does the term “Force Majeure” mean? Literally translated, the term means “superior force”. The most recent version of the FAR/BAR Contract defines the term as “hurricanes, floods, extreme weather, earthquakes, fire, or other acts of God, unusual transportation delays, or wars, insurrections, or acts of terrorism, which by exercise of reasonable diligent effort, the non-performing party is unable in whole or in part to prevent or overcome.”

 My closing was scheduled two days prior to Irma, am I required to close? The answer depends on whether your performance or the availability of a service (including insurance or required approvals essential to close) is disrupted, delayed, caused or prevented by Hurricane Irma (the Force Majeure). If you are unable to obtain insurance, wire money, obtain your association approval, receive loan documents, due to the Force Majeure, then you are not obligated to close. However, if all services are available and nothing is preventing you from closing except your unwillingness to close, that is a different story requiring a deeper analysis.

•  I was supposed to close on September 11, 2017 and was unable to due to the impact of Irma. Do I need a contract extension? The FAR/BAR contract provides that “all time periods, including the Closing Date, will be extended a reasonable time up to 7 days after the Force Majeure no longer prevents performance under [the] Contract.” So, by way of example, if your closing date was September 11 and the bank lending you the funds is unable to deliver the documents because their offices do not have power, your closing is automatically extended up to 7 days after power is returned to those offices such that the employees can perform as they were prior to the storm. So that all parties are on the same page, it is wise that you notify the other party in writing of the reason for the delay and provide supporting documentation and further iterate that the deadline will extend automatically until such time as the performance can occur.

•  How long does this automatic extension last? The FAR/BAR contract states that if the Force Majeure prevents performance under the contract by more than 30 days, then either party may terminate the contract, so the automatic extension would last 30 days. If the delay is going to be greater than 30 days, the parties should execute an addendum agreeing to an extension timeframe, otherwise the risk of cancellation by either party exists.

•  I already performed my inspection of the property, then the hurricane hit. Do I get another inspection? The FAR/BAR contract places the burden on the Seller to maintain the Property Realtor(including lawn, shrubbery and pool) in the condition existing as of the Effective Date. A Buyer would be entitled to inspect the Property to ensure the condition has not changed since the original inspection. Ordinary wear and tear is acceptable. Therefore, if a portion of the roof was damaged due to the hurricane, the obligation to repair that damage falls on the Seller (as limited by the risk of loss provisions in the contract). The post Force Majeure inspection is not an opportunity for a Buyer to find items which were present during the original inspection and negotiate a reduction to the price of the home.

•  I am selling my home and the storm caused a window to shatter. My contract is “as-is”. Isn’t this the Buyer’s responsibility? No. As stated in the answer to the previous question, the FAR/BAR contract places the burden on the Seller to maintain the Property in the condition existing as of the Effective Date. A window damaged after the contract is effective would be the responsibility of the Seller to repair. Seller is responsible to repair damages to the Property up to 1.5% of the Purchase Price. If the cost to repair the damage exceeds 1.5% of the Purchase Price, the Buyer may elect to take the Property in “as-is” condition together with a 1.5% credit or terminate the transaction and receive a refund of the Deposit.

These are just a few of the questions we received over the past week. The facts will dictate the response.
The attorneys at ATS are offering free support to real estate agents to assist with contract questions due to post-Irma difficulties.

Open Permits are a Big Issue

One of the hallmarks of Association Title Services is our Real Estate Agent Educational Enhancement Program. This program was developed for our loyal following of real estate agents who are continuously seeking to enhance their customer base through the educational enhancement offered by our attorneys. As part of our program, we present you with this blog post written by Becker & Poliakoff attorney Hugo Alvarez.  We hope you find it valuable.


Imagine for a moment that you are working with a buyer. You find them a home. Buyer and seller agree on price and terms and go under contract. In this hypothetical your buyer also has to sell their current home, therefore you use the V. SALE OF BUYER’S PROPERTY addendum, which is the correct addendum to use. Your buyer inspects the property, timely applies for his or her loan, the property appraises and your buyer’s lender issues a Loan Approval which is delivered to the seller with one condition; that buyer sell their existing property. Buyer’s existing property is under contract with an ALL-CASH buyer and the inspection period on that contract has expired. The sale of buyer’s property is therefore, for the most part, a certainty. Movers have been scheduled. Everything is in order.

You then receive a letter from the seller’s attorney cancelling the current transaction and citing the buyer’s failure to provide a Loan Approval within the Loan Approval Period. You do some diligence and what appears to have occurred is that the seller received an ALL-CASH offer for $20,000.00 more than your current contract.

You are horrified. Your buyer’s plans are dashed. Can the seller do this? The answer is “yes”.

The above scenario is very real. Below is how this scenario may occur as well as a solution to prevent it from occurring:

Section 8(b)(i) of the contract reads: “Buyer shall make mortgage loan application for Financing within ___ (if left blank, then 5) days after Effective Date and use good faith and diligent effort to obtain approval of a loan meeting the Financing Terms (“Loan Approval”) and thereafter close this Contract.”

“Loan Approval which requires a condition related to the sale by Buyer of other property shall not be deemed Loan Approval for purposes of this subparagraph.” (Emphasis Added)

The underlined language above becomes problematic for a buyer who has obtained what they believe is “Loan Approval” (containing the condition requiring the sale of Buyer’s property) within the appropriate timeframe and has provided that “Loan Approval” or notice thereof to the Seller. What has been provided is not Loan Approval at all. The contract condition has not been satisfied. In that case, section 8(b)(v) of the contract states that “if Buyer fails to timely deliver either notice provided in Paragraph 8(b)(iii) or (iv), above, to Seller prior to the expiration of the Loan Approval Period, then Loan Approval shall be deemed waived, in which event this Contract will continue as if Loan Approval had been obtained, provided however, Seller may elect to terminate this Contract by delivering written notice to Buyer within 3 days after expiration of the Loan Approval Period.” (Emphasis Added)

Because what your buyer delivered to the seller does not qualify as Loan Approval, then, upon the expiration of the Loan Approval Period the Seller may elect to terminate the Contract.


Until such time as this scenario is rectified by the drafters of the FAR/BAR Contract, a simple solution is, when using the V. SALE OF BUYER’S PROPERTY addendum, add the following language to that rider: “If Paragraph 8(b) is checked in the Contract, the second sentence of Paragraph 8(b)(i) is deleted.” This insertion will allow the conditioned Loan Approval to meet the definition of Loan Approval. The condition requiring sale of buyer’s property remains unaffected pursuant to the addendum.

Agent Tip of the Week: March 8, 2017

As you may be aware, the changes to the FAR/BAR Residential Contract (both the “AS-IS as well as “NON-AS-IS” versions) will go into effect April 4, 2017.

While full redline versions are attached below:

Residential Contract For Sale And Purchase
“AS IS” Residential Contract For Sale And Purchase

The change which will have the most significant impact on your buyers and sellers is the modification to the Financing section.

Buyers will now be required to obtain a “Loan Approval” within 30 days from the Effective Date, unless otherwise stated. The newly defined term “Loan Approval” is a change from the current defined term, “Loan Commitment”. The issue with the newly defined term is that it is loosely defined in the contract as “approval of a loan meeting the Financing terms”. It is not unreasonable for one to interpret the term Loan Approval to mean “an unconditional approval”, however the contract does not define the term as such. Moreover, by virtue of the conditional language in Section 8(b)(vii), Loan Approval may be conditioned on, at a minimum, property related conditions as well as the appraisal. I anticipate that this issue will need to be clarified – and as the new version makes its rounds – it will. The takeaway here is that, regardless how the term is defined (Loan Approval or Loan Commitment) the buyer should have a candid discussion with their lender prior to the issuance of document which remotely resembles a Loan Approval. The discussion should be centered around the fact that once the Loan Approval is obtained “or deemed to have been obtained”, as the new version of the contract provides, and the buyer then fails to close, the buyer’s deposit could be at risk. Real estate agents and lenders should proceed cautiously with regard to this section of the contract and call upon real estate attorneys for counsel.

In addition to the above changes, the updated version of the contract allows a buyer to terminate the contract for inability to obtain the Loan Approval through expiration of the Loan Approval Period. This is a departure from the current version of the contract which limits a buyer’s ability to terminate the contract to a time period which is no later than 7 days prior to closing.

Agent Tip of the Week: Open Permits and Title Insurance

One of the hallmarks of Association Title Services is our Real Estate Agent Educational Enhancement Program. This program was developed for our loyal following of real estate agents who are continuously seeking to enhance their customer base through the educational enhancement offered by our attorneys. As part of our program, we present you with the “Agent Tip of the Week” and hope you find it valuable.

Open permits are not covered by title insurance. Open permits are considered matters of zoning and therefore are excluded from title insurance coverage. This exclusion is located within the fine print (jacket) of the Owner’s Title Insurance Policy. It is important, when processing a transaction, that the title insurance company order a permit search in a timely fashion to afford a buyer the ability to address the open permits with the owner of the property.

Association Title Services is managed solely by real estate attorneys who have almost a century of real estate closing and title experience. Please do not hesitate to contact us directly for more information on how you can become part of our Educational Enhancement Program.


Agent Tip of the Week: Residential Contracts and Special Assessments

One of the hallmarks of Association Title Services is the educational assistance we provide to our real estate agents. Below is your “Agent Tip of the Week”.

The Special Assessments referred to in Section 9(f) of the FAR / BAR AS IS Residential Contract refers to municipal assessments, not condominium or home owner association assessments. An example of a municipal assessment is where the municipality imposes a lighting improvement tax in a certain area. This is typically done through a resolution. The tax is often spread out over a number of installment payments and invoiced to the property owner in their real estate tax bill. These installment payments may be paid by either seller or assumed by buyer depending on which selection under 9f is checked.

As a 20-plus year real estate attorney, I have developed a loyal following of real estate agents who are seeking to enhance their customer base through education. Please do not hesitate to contact me directly with any questions you might have.

It’s Homestead Application Time Again in Florida

All legal Florida residents are eligible for Homestead Exemption on their homes, condominiums, co-op apartments, and certain mobile home lots if they qualify.

A Florida resident is entitled to receive Homestead Exemption on a property if, as of January 1st, that property is the resident’s permanent home. Permanent residence is determined by January 1 of each year.

The timely filing period for Homestead Exemption for 2017 ends on March 1, 2017. The absolute deadline for late filing for any 2017 exemption (if you miss the March 1 timely filing deadline) is September 18, 2017. State law (Sec. 196.011(8), Fla. Stat.) does not allow late filing for exemptions after this date, regardless of any good cause reason for missing the late filing deadline.

Below is the information you will need when filing for Homestead Exemption:

1. Proof of Ownership: In general, the recorded Deed or Co-op Proprietary Lease must be held in the name(s) of the individuals applying for Homestead. If the property is held in a trust, a copy of the trust agreement or certificate of trust is required.

2. Proof of Permanent Florida Residence — preferably dated prior to January 1 of the tax year for which you are filing — is established in the form of:

A. Florida’s Driver’s License (or — for non-drivers only — a Florida I.D. Card) is REQUIRED. You MUST also have either of the following:

1. Florida Voter’s Registration; or

2. Recorded Declaration of Domicile.

B. FOR NON-US CITIZENS, you MUST have the items listed above AND proof of permanent residency, asylum/parolee status (or other “PRUCOL” status); OR proof you are the parent of a US-born (US Citizen) minor child who resides with you.

A property with Homestead Exemption receives a reduced value for real estate property taxes. In addition, the constitutional homestead protections afford the owner protection from forced sale to meet the demands of creditors. There are however some exceptions to the constitutional homestead protections, such as parties to whom the property was pledged as collateral for a mortgage.

In Broward County, you may file online

In Miami-Dade County, you may file online

Are you Subject to a FinCEN Targeting Order?

A FinCEN Targeting Order has Been Extended to Cash Purchases of Residential Property in Miami-Dade, Palm Beach and Broward Counties for $1,000,000 or more by a Legal Entity

In January of this year the Financial Crimes Enforcement Network (“FinCEN”), issued a Geographic Targeting Order (“GTO”) which requires offices and agents of various title insurance underwriters to collect and report information regarding certain purchases/sales of residential property. The GTO applies to residential properties located in Miami-Dade County with a sales price of $1,000,000 or more that closed on or after March 1, 2016 through August 27, 2016.  Additionally, the information applies to a purchase made without a bank loan where the buyer is a legal entity such as a limited liability company, corporation, partnership or similar business entity, but not a trust.

July 2016 GTO extends into Palm Beach and Broward Counties

On July 22, 2016, FinCEN issued another GTO, (“July 2016 GTO”). Starting August 28, 2016, the July 2016 GTO will include properties in Palm Beach and Broward Counties that meet the reporting criteria.

July 2016 GTO Expands Criteria to Include Personal & Business Checks

The original GTO requires reporting if the purchase price is paid in cash, a cashier’s check, a certified check, a traveler’s check, or a money order in any form. The original GTO did not require reporting if the purchase price was paid by a personal or business check. In addition to expanding the counties regulated and the timeframe through February 23, 2017, the July 2016 GTO adds personal and business checks to the list.

What does this mean to you?

Closing agents are required to collect and report information regarding real property purchases which meet ALL of the following:

  • The purchase of the residential property is located in Miami-Dade, Palm Beach or Broward County.
  • The purchase is completed on or after August 28, 2016, through February 23, 2017.
  • The purchase price is $1,000,000 or more.
  • The buyer is a legal entity, (e.g., limited liability company, corporation, partnership or similar business entity, but not a trust).
  • Purchase is made without a bank loan or other similar form of external financing (financing by a financial institution that is required to have an anti-money laundering policy).
  • Purchase price is paid, in whole or in part, with cash, cashier check, certified check, travelers check, money order in any form, personal or business check.  This does NOT include a sale where the purchase price is paid entirely by a wire transfer.

If You Are a Home-Buyer, You Will Want to Know These Important Steps

Read this resource for a comprehensive list of steps that home-buyers must work through in order to purchase their home.