Common Questions About Florida Law
It is natural to have many questions and worries when faced with a legal issue or litigation. The experienced lawyers at DeLoach, Hofstra & Cavonis, P.A., ask many common legal questions and provide useful answers to help get you in making the best decisions for you and your family.
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If I have a good estate plan, can I avoid a guardianship proceeding altogether?
For the most part, yes. But as is always the case, the answer is “it depends.” As in cases where an estate plan is not updated to adjust to changing life circumstances. An estate plan is never a “set it and forget it” type of thing. Here is one example:
A married couple in their sixties, nearing retirement, with one adult daughter makes an estate plan. As part of the estate plan, the couple appoint each other the agent on their respective Powers of Attorney, and their adult daughter as the only successor agent.
In the ensuing years, their daughter predeceases each of them. Many years later, now in their 80s, the husband becomes incapacitated, and while serving as the husband’s agent under the Power of Attorney, the wife (the “caretaker spouse”) dies. In this tragic, but not uncommon example, the last to survive is incapacitated, with nobody authorized to manage his affairs through the Power of Attorney. A guardianship will need to be created to manage the health and finances of the surviving husband.
Importantly, it should be noted that even this example could have been avoided if the couple simply updated their Power of Attorney at the death of their daughter by adding one (or two) successors (i.e. grandchildren, nieces, nephews, etc.). The takeaway being that an estate plan needs to be revisited by everyone in order to account for the various changes in circumstances life brings.
If you need help updating your estate plan or have questions about guardianship, please contact us.
How Is the Probate Estate Closed?
Once all assets have been gathered, inventoried, the 90 day creditor’s period has run, and payment of claims, if any, have been made, the estate can usually start making the distribution of assets. Interested parties are provided a Petition for Discharge, setting forth the personal representative’s fee, attorney’s fees, estimated final costs, and an accounting of all of the estate’s income and expenditures. As all of the assets will be known at this point, the beneficiaries will receive the amount of their inheritance.
If all beneficiaries agree to the Petition for Discharge, the estate can be finalized quickly. Assets can then be distributed to the beneficiaries, costs paid, etc. In the event of problems, the beneficiaries have 30 days in order to make objection to the Petition for Discharge. If an objection is filed by a beneficiary, the probate court may require a hearing on the objection’s validity.
As previously discussed, the full probate process takes about 6-7 months from start to finish under most circumstances.
What Will I Need to Start the Probate Process?
After reviewing the decedent’s assets, the family will generally determine that they need a probate attorney to get things started. Sometimes a financial institution such as a bank or insurance company will inform the family that they need “letters from the court” or something to this affect. Before seeing an attorney, the family will generally need the following information:
- Original Last Will and Testament (if one exists)
- At least original death certificate – short form (2 if real property is involved)
- Preliminary list of decedent’s probate assets
- Names and address of all persons named in the last will and testament, if known, or name/address of intestate beneficiaries
Once the probate attorney is hired, a petition for administration is sent to the court. If all works well, the court then issues letters of administration, which allows the personal representative the legal authority to act on behalf of the estate.
The process mentioned is for a formal probate administration. If the estate is simple and worth less than $75,000, then a summary administration may be available.
How Do I Find The Right Probate Attorney?
You should first start by gathering the names of potential attorneys. If you know any attorneys in the area, that is a good place to start. The attorney you know may practice in probate or may be close to an attorney who does. You can also use the internet to find an attorney. Do not type in “probate attorneys” as this will call up a million results. Rather, type in “probate attorney in ___ [your town] Florida.”
Look for lawyers who practice primarily in probate and estate planning. A lawyer who specializes is better than a “jack of all trades” type of firm or lawyer. Today, the law is more complex than ever and you need an attorney who stays on top of his or her primary field. When you meet with the prospective attorney, be prepared to ask the following questions:
- What are their primary areas of practice?
- How many probate cases have you handled?
- Would your past probate clients recommend you?
- How many continuing legal education conferences to you attend each year?
- Do you have experienced paralegals who will help you?
- What are your fees and how do you calculate them?
- Do they bill by the hour or will they use a flat fee?
Of course, you should be comfortable with the attorney you hire, have a good rapport, and feel that you can go to them in the event problems arise.
What does it mean when an attorney is “board certified?"
Board certification is a mark of the highest quality of legal services in a particular field. Only seven percent of eligible Florida attorneys have earned board certification in a specialty area, making us extremely fortunate to have two board certified attorneys in our law offices: Board Certified Elder Law Attorney D. "Rep" DeLoach III and Board Certified Civil Trial Attorney Paul R. Cavonis.
Benefits of Hiring a Board Certified Attorney
The certification program is approved by the Florida Supreme Court and administered with rigorous requirements by the Florida Bar. The Florida Bar evaluates all certified lawyers for expertise in a particular area of law, as well as professionalism and ethics in the practice of law.
Certification is the highest level of evaluation by the Florida Bar, and clients who hire certified lawyers should expect:
- Experience. Board certified lawyers must have a minimum of five years practicing law.
- Focus. Certified lawyers received passing grades on comprehensive examinations for their specialty areas; or met strict criteria of knowledge, skills, and expertise to exempt them from the exams. They're also heavily and actively involved in their fields of law.
- Continuing education. In order to maintain board certification, attorneys must continue to practice law and attend Florida Bar-approved continuing legal education courses in their specialty fields. Attorneys must have their certification renewed every five years by meeting education and experience requirements similar to those of initial certification.
- Good standing among peers. Certified lawyers are recognized by their fellow attorneys as having the highest level of competence in their specialty fields. The required peer review assessment also involves opinions on the character, ethics, and professionalism of the certified attorney.
At DeLoach, Hofstra & Cavonis, P.A., we're dedicated to helping our clients through the most difficult times in their lives. To find out how we can help, simply fill out the quick contact form on this page to set up your consultation.
Can I challenge a relative's will if I was disinherited?
A last will and testament is a legal contract, and disinherited family members cannot contest a will simply because they don't agree with its terms.
That said, there are valid legal reasons for challenging a will in most states. If the court decides one of these reasons exists, the provisions of a last will and testament can be invalidated.
Legal Reasons to Contest a Relative's Will in Florida
State laws vary on the reasons why a relative may contest a will in court, as well as what happens if the dispute is successful. Depending on what grounds the will is challenged, a Florida court may declare one or more provisions of it invalid, or it can rule that the entire will is invalid.
Under Florida law, a relative can legally challenge a last will and testament if:
- The decedent lacked the mental capacity to sign the will. If the court finds that the decedent didn't have the mental capacity to create or sign the will, the entire document would likely be declared invalid. This means everything in the decedent's estate is distributed according to Florida's intestacy laws, just as if he or she had died without a will.
- The decedent was unduly influenced. A will may be void because someone else forced or influenced them to make a decision they wouldn't ordinarily have made.
- The will was procured by fraud. A will may be declared invalid if the decedent was deliberately misled by someone else, or if it was fraudulently created or obtained.
- The will wasn't created in accordance with state law. Each law sets forth procedures that must be followed in order to make a will legally binding. For example, every will in Florida must be signed by the testator in the presence of two witnesses, who must also solve the will in the presence of the testator. If the documents were not signed with the correct formality, then a court will invalidate them.
If you believe you may have grounds to challenge a loved one's will, the attorneys at DeLoach, Hofstra & Cavonis can advise you on potential options. Simply fill out the quick contact form on this page to set up a consultation and get answers to your questions.
Why Is It Important to Fill out the Questionnaire Prior to Your Meeting?
Why Is It Important to Fill out the Questionnaire Prior to Your Meeting? (Transcript)
D. "Rep" DeLoach III, Estate Planning and Board Certified Elder Law AttorneyThank you for choosing our law firm to help with your estate planning. As part of your initial consultation, we're going to send you a questionnaire for completion for you to bring in with you to your initial appointment. This questionnaire is very important to us and it's very important that you take your time to fill out completely and accurately.The questionnaire will set out your age, address, occupation, but also gives the names of potential beneficiaries. So it'll spell out things (or names) that we may need, or other important aspects to your estate plan. We'll also need a list of your assets in the questionnaire and those assets will provide us a basic understanding of your estate plan. And this is a very, very important piece of the plan.We need to know your assets because we need to know how to best plan your estate based upon where your assets are, what are the potential values of the assets, how these assets should be distributed. And it's important that you do this and take your time. It's going to help make sure we have a great first meeting, and we don't have to go back and get basic information. We can jump right in and start helping you out.Again, we look forward to meeting you and thank you so much.
Texting and Driving in Florida
Electronic devices are the biggest cause of distractions for drivers nationwide. In 2016, Florida alone saw roughly 50,000 accidents and 233 fatalities as a result of distracted driving.
In the time it takes to glance at a text message, a driver can travel nearly 300 feet—enough to strike a pedestrian, hit the back of a stopped line of cars, or even veer off the road entirely.
Florida Drivers May Be Ticketed for Texting and Cell Phone Use
In 2019, Gov. Ron DeSantis signed a bill into law strengthening protections against electronic distractions and making texting and driving a primary offense. As of July 1, law enforcement officers may pull over drivers who are texting without any other reason for the traffic stop.
Florida detracted driving laws place specific restrictions on:
- Cell phones. While it's legal for drivers to make and answer calls, all drivers in school zones and construction areas must use hands-free systems in order to talk on the phone. Troopers from the Florida Highway Patrol troopers may begin issuing warnings for cell phone use beginning October 1, 2019 and issue citations for the practice after December 31.
- Texting. It's illegal for drivers in Florida to text while driving. This includes manually typing or entering multiple letters, numbers, symbols or other characters into a virtual keyboard, hitting a button on a wireless device to send messages, or reading any data off a device while a vehicle is in motion. Drivers face a $30 fine for a first offense, plus court costs; with second and subsequent offenses within five years, there's a $60 fine and an addition of three points to their licenses. Drivers caught texting in a school zone may have two additional points added to their licenses, while motorists whose texting resulted in a crash will have six points added to their licenses.
- Truckers and bus drivers. Operators of trucks and buses are held to a higher standard than other drivers. Both truck and bus drivers are only allowed to use wireless communication devices if they're hands-free, and can be pulled over and charged if they use a handheld electronic device while driving in Florida law without committing another violation. For the first violation, commercial drivers can receive a fine up to $500 and their companies can be charged separate costs up to $2,750. If a driver commits three texting violations or more, he or she can be liable for a $2,750 fine and license suspension for 120 days, while the employer can be fined up to $11,000.
If you've been injured in a distracted driving accident, you should have the incident investigated as soon as possible. A thorough examination can reveal if a driver was using his or her cell phone at the time of the accident, which can significantly affect the amount of damages a victim is awarded.
Our attorneys can help you build a strong injury case and advise you of all of your legal options. Simply fill out the form on this page today to make an appointment in our offices, or call the number on this page to speak to an attorney.
What is a fiduciary? Who should act as my fiduciary?
When you are planning for your death and incapacity, one of the first questions is who would be your fiduciary? Your fiduciary is one of the key decision-makers in any estate plan, and the potential roles include your successor trustee, personal representative (i.e. your executor), your attorney-in-fact (your power of attorney), and your designation of health care surrogate.
What is a Fiduciary?
A fiduciary is a trusted person or institution that can act for you upon your death or incapacity. A fiduciary is held to the highest standard of trust in the legal world. For estate planning purposes, your fiduciary roles can be separated out in different ways:
- Successor Trustee: While not everyone needs a living trust, your successor successor trustee can manage your financial affairs during your lifetime and also upon your death.
- Personal Representative: Also known as your "executor," your Personal Representative is appointed to handle your probate estate upon your death as part of the Florida probate process.
- Attorney-in-Fact: The person named in your durable power of attorney, this person handles your financial and legal affairs. If you become incapacitated and you have not created a durable power of attorney in advance, you may need a guardianship for someone to manage your legal and financial decisions.
- Health Care Surrogate: You should name a decision-maker if you are unable to handle your medical decisions. In Florida, you nominate this person in a designation of health care surrogate. If you become incapacitated without naming a health care surrogate, your family can become your health care proxy.
Often, the same person can serve in all of these fiduciary roles - your successor trustee, personal representative, attorney-in-fact and your health care surrogate.
Who should act as my Fiduciary?
First, you must trust the person you name in any role. There is no better way to create problems in your estate plan than to name an untrustworthy person. After that, the person you name should be able to act if needed. Someone who lives out of state, for instance, may not be a great choice if you have a trusted local person. Finally, you must trust this person’s ability to run your affairs. The person you name should have the financial and emotional ability to handle difficult situations in being your advocate. We have a list of ways to choose your health care surrogate, for instance.
What if I do not have any children or family?
While most people look to family fiduciaries, this is not possible for everyone for a variety of reasons. If you do not have a trusted family member who is able and willing to assist you, some estate planning attorneys serve as fiduciaries. If your estate planning attorney will not do this for you, he or she may know professional guardians and banks who could help you in the event of your death or incapacity. As an elder law attorney, our law firm serves in this role for some clients.
What Makes an Asset Go Through Probate Upon Death?
Most people know that when they die, they want their assets to avoid the probate process. Most people do not even know what probate is, but they know they want to avoid it. But what is probate and, even more important, when do assets go through probate in Florida?
First, probate is the court process to properly settle your estate upon your death. The probate process was created to make sure the decedent's taxes are paid, legally enforceable bills are paid, and assets go to the right people (i.e., their heirs). Their are four types of probate in Florida, each applying in very specific situations. The four types are:
- Formal Administration: A typical "probate" process where the court appoints the personal representative (i.e., "executor") to settle the estate.
- Summary Administration: A shorter and more simple form of probate when assets are less than $75,000 and all of the decedent's bills are paid (among other matters).
- Disposition without Administration: Not really a probate, per se, but a simple way for a family member or other person to get paid for last funeral costs.
- Ancillary Administration: When the decedent was not a resident of Florida but owned real property here.
We have more on the types of Florida probates here.
Let's get back to the question posted - what makes an asset go through probate in the first place? Probate assets are assets that were either:
- In the decedent's own, individual name upon their death; or
- Did not have a beneficiary designation upon death.
Assets in the decedent's own, individual name would be just about anything - bank accounts, stocks, bonds, brokerage accounts, real property (i.e., land), and more. When someone dies with these assets, no matter what the value, the family/heirs will need to look to one of the processes above in order to take control of the asset.
If someone had a life insurance policy, IRA, 401k, etc., that did not have a beneficiary designation, that asset would also be subject to the probate process.
Example of Probate Assets:
Mom dies with a bank account and her homestead property, both in her individual, individual name. The family/heirs will need to see a probate attorney to gain control of the bank account and to sell the home.
Where are Probate Assets Distributed?
Probate assets are distributed according to the decedent's last will and testament, if they have one, and if not, then according to the laws of intestacy, which roughly means going to your family in the order set forth in the Florida statutes.
What Should I do to Avoid Probate?
There are a number of ways to avoid probate with your own estate plan. If you want to learn more about how to avoid probate, please download a copy of my book, The Top 20 Rules to Protect Your Florida Estate.
If you want to learn more about probate:
- Do I need to hire an attorney to probate a Florida estate?
- Does probate have a small estate affidavit?
- Download our free book, Navigating the Florida Probate Process!
What Are Some Pet Laws in Pinellas County?
Whether you are taking a trip to the veterinarian or are just out for a ride, pet owners often transport their animals in and out of cars. In an effort to protect both pet owners and their four-legged friends, Pinellas County created laws to ensure the safety of animals. Here are a few:
What does the law say about the transportation of my pet?
Most people don’t know this, but your pet must be safely enclosed in the vehicle or protected by a container, cage, cross tether, or another device, which would prevent the animal from falling, being thrown, or jumping out of the motor vehicle in Pinellas County.
Is it illegal to leave my pet in the car?
When the temperature outside reaches 85 degrees Fahrenheit, the temperature inside a car can climb to 120 degrees in just 30 minutes, so leaving pets unattended in cars on warm days, even for a short time, can cause irreversible organ damage or even death, according to the Humane Society of the United States.
In Pinellas County, an animal cannot be confined or remain unattended in a vehicle in conditions that would endanger the well-being of the animal due to lack of ventilation or water, heat, or any other condition that pain and suffering, disability, or death to the animal is expected to occur.
If I can’t leave my pet in the car, can I restrain it outside?
No, in Pinellas County, it is unlawful for a person to tether, fasten, chain, tie, or restrain a dog or cat to any stationary object, unless it is within the visual range of the owner.
Is there a leash law in Pinellas County?
Yes, the law states, “No dog or cat shall run at large within the county. Any person who possesses, harbors, keeps, or has control or custody of any dog or cat which is running at large shall be in violation, regardless of the knowledge, intent or culpability of the owner.”
For more information on pet laws, visit the Pinellas County Animal Services website.
Do I really need a realtor for a residential real estate transaction?
Maybe. Buying a home is a stressful and overwhelming process, often from the first online search for real estate listings. Realtors can alleviate a lot of the stress and confusion homebuyers face, but they'll also take a fee for their services. That said, realtors may be wise investments for people who don't want to do the legwork, research, and negotiations necessary to get the best possible deals.
Using a Realtor to Buy Florida Real Estate
A realtor is a person who performs real estate-related duties for someone buying or selling a home. A realtor working for the seller is often called a seller’s agent, while the realtor representing the buyer is known as a buyer’s agent.
Generally, both buyers’ and sellers’ agents work on commission—usually a percentage of the home’s final purchase price. The fee is generally settled at closing, so you won’t pay for the agent's services until he or she is finished working for you. In some cases, a realtor may want clients to sign an exclusivity contract, which is a promise that you won’t work with another broker for a specified period of time.
In addition to fees, there are a few other considerations when hiring real estate agents. For example, they are unable to offer legal advice during a real estate transaction. Also, since their commissions are based on the sale price of the home, so they likely have a vested interest in the sales price of the property you are buying.
Buyer’s Agent Benefits for a Florida Home Purchase
Realtors are not the only people who can act as buyers’ and sellers’ agents. A real estate attorney can also perform certain duties of a real estate agent, with the added bonus of advising you on legal matters that arise during the transaction.
Whether you're using a realtor or real estate attorney to buy property, your buyer's agent can be invaluable throughout the process by:
- Finding potential properties. Buyers can easily miss opportunities in a seller’s market, where homes may be sold within days of public listing. Agents often receive information about listings and potential listings ahead of the general public, and can contact you immediately if a home matching your specifications is becoming available.
- Experience. Buyers' agents have experience in the market trends, neighborhood statistics, zoning codes, school districts, and local businesses in residential areas. This specialized knowledge is much more beneficial at the start of a home search, as learning about potential downsides later in the purchase process can cause delays or cancel the transaction altogether.
- Offering mortgage advice. Realtors often recommend one or two lenders for buyers who need to finance home purchases, and agents are forbidden from profiting off of these referrals to lenders.
- Negotiating with sellers. Agents can perform market analyses that tell you if a seller’s asking price is too high or too low, and will consider any potential repairs or costly problems on the property to calculate a competitive offer. They're often familiar with the costs of upgrades, title problems, and seller motivations that can be leveraged during negotiations.
- Closing. Real estate closings involve a deluge of paperwork, and agents are familiar with drawing up the documents and contracts necessary to complete closing. If buyers have questions during closing, they can clarify a document’s meaning with the agent before signing, attaining peace of mind.
Our real estate attorneys can work alongside or instead of a realtor to give buyers the best chance of finding an affordable home while protecting their interests. Simply fill out the quick contact form on this page to set up a consultation and get answers your questions.
When should I accept a buyer’s offer on my house?
Whether you receive one offer on your home or several, it can be difficult to tell if the terms and suggested purchase prices are right for you.
In addition, sellers have a limited period of time to consider offers before they expire, making it even more stressful to choose the right buyer.
Fortunately, there are a few factors that can help sellers determine when a buyer’s offer meets their needs.
Three Things to Consider Before Accepting an Offer
While sellers may be tempted to accept the highest offer on their homes, there's much more to consider than the sale price.
An offer that's far higher than the rest may cause a seller to refuse other potential buyers—only to have the offer fall through. Ultimately, sellers have to evaluate which offer presents the best deal. This may not always be the one with the highest price.
Before deciding whether to accept or pass on an offer, sellers should carefully examine:
- Financing. With a cash offer, there's no need for a buyer to involve a lender, eliminating many of the approvals and deadlines imposed when there's a mortgage provider. Cash offers typically mean shorter wait times for closing and far less paperwork in the transaction.
- Timing. Timing affects every aspect of a real estate transaction, from listing to closing. A seller with a specific timeframe for moving—such as relocating to a new city for a job—may be more likely to accept a first offer; while someone who is selling the house for other reasons may wait for a higher bid. Even the amount of time the house is on the market can affect its value, with the highest offers likely in the first few months the house is listed.
- Details. If a buyer’s offer is slightly low but meets time constraints, sellers may make a counteroffer to the asking price, or negotiate for the buyer to pay for closing costs, inspections, or repairs.
In most cases, the best offer is the one that provides the most benefits to the seller’s unique situation. Our real estate attorneys have over 30 years of experience representing buyers and sellers in Florida, and can examine the details of your offers to help you choose the one that best suits your needs.
Simply fill out the quick contact form on this page to set up a consultation and get answers your questions.
What are the legal remedies if a resident doesn't pay housing association fees?
All members of a community association are responsible for paying dues and assessments in a timely manner. While Florida law allows a homeowners’ association to take action against a resident who falls behind on payments, there are specific procedures that must be followed—and failure to follow the law can place the association at risk of a lawsuit.
Florida Regulations Allowing HOAs to Collect Fees from Homeowners
Homeowners’ associations (HOAs) often outline the procedures that can be taken against a homeowner in its governing documents, such as suspension of rights or the filing of a lien. However, the governing documents are only enforceable if they're in compliance with state HOA statutes.
Under Florida law, the HOA must:
- Give notice to a delinquent owner. The HOA board must issue a demand letter stating the amount of the outstanding debt and the steps taken if the debt isn't paid. Potential penalties include late fees; suspension of voting rights in HOA meetings; and suspension of use of common areas, such as tennis courts or pools.
- Notify the homeowner before filing a lien. If the homeowner fails to resolve the debt after a demand letter is issued, the HOA may consider filing a lien against the home. Before a lien can be filed, Florida law requires the HOA to provide a homeowner with a written demand for the outstanding amount and permit him or her 45 days to pay the amount in full. Florida law also dictates the charges allowed in an assessments lien, including past due assessments, administrative late fees (up to $25 or five percent of the amount of each installment that is past due), interest on unpaid assessments, and attorney’s fees.
- Notify the homeowner of intent to foreclose. If the matter isn't resolved, the HOA may file a lawsuit to foreclose on the home to collect the assessments. The HOA cannot initiate a foreclosure unless it notified the homeowner with intent to foreclose and allowed 45 days after the notice to settle the debt.
How an Attorney Can Help You Navigate an HOA Dispute
An attorney can be extremely useful when an HOA is having trouble collecting past due assessments. Our community association lawyers ensure the HOA is following Florida legal requirements. We can also:
- Inform owner of violations. Our firm assists with corrective action for homeowners in arrears, ensuring that notifications were issued in compliance with state laws and governing documents. We can also perform collection services for our association clients regarding past-due accounts.
- Tenant collections. If a homeowner rented out the property to a tenant, we enforce delinquent tenant procedures outlined in the governing documents.
- Negotiate between the parties. A homeowner may refuse to pay assessments for a number of reasons, from insufficient funds to the unfair levying of fines. Our attorneys perform mediation and arbitration services, including negotiating an amount for a qualifying offer to satisfy the debt.
- Represent the HOA. If the homeowner doesn't comply with the terms of the qualifying offer or an agreement cannot be reached, the HOA’s foreclosure action may proceed to court. We represent the association in foreclosure litigation and work to remove the owner’s right of possession to the property.
- Prevent future disputes. In many cases, an HOA can avoid costly collection and litigation costs by strengthening its governing documents. Our attorneys examine existing governing documents and bylaws; rewrite vague language or outdated information; ensure that declarations and collection procedures are compliant with Florida law; and advise association directors on available enforcement options.
Our attorneys have over 30 years of experience representing homeowners and their associations through all aspects of their business operations. Whether you need help creating the governing documents of your HOA, or the association is in the middle of a dispute with a member, our experienced real estate attorneys can answer your questions and advise you of your legal options. Simply fill out the quick contact form on this page to set up a consultation.
What is a short sale?
A short sale offers a way for a seller and a mortgage lender to avoid foreclosing on a home. Essentially, the lender agrees to accept less than the full outstanding mortgage price of the house, usually because the seller can't pay or owes more on the home than it's worth. The lender would rather recoup some of its money through a short sale to another buyer than undergoing the expense of repossessing the home in foreclosure.
Before the seller can list a house at less than the amount required to pay off the mortgage, the seller must obtain the lender’s permission. If the property is approved for short sale, the buyer will negotiate a price with the seller before taking that price to the lender.
However, the lender isn't required to accept any offer it believes is too low, even if the seller has accepted it.
What Buyers Should Consider Before Purchasing a Short Sale Home
The first thing to know about short sales is that buyers aren't getting a “discount” on the property. Lenders won't approve a short sale purchase if the lowered price is below market value for the home. Mortgage lenders will consider the comparative market analysis (CMA) carefully to know exactly what the property is worth, and won't hesitate to take the property to foreclosure if it believes it can get a higher price.
Before you tell your real estate agent to include short sale homes in your search, you should:
- Perform a public records search. If you want your purchase price offer to be accepted, the offer needs to be reasonable to the lender. A search of the public records reveals who holds title to the property (there may be more than one holder); how much is owed to the lender; and whether a foreclosure notice has been filed—all of which can help determine the amount of your offer.
- Do your due diligence. Just because buyers aren’t paying the price the seller paid doesn't mean the home is a bargain. There may be a variety of problems with the property, especially if it's sat vacant for some time. Unfortunately, short sales typically sell “as is,” so the lender may not be required to issue a disclosure statement outlining any known problems with the home. Buyers should extra careful during the home inspection process, especially when it comes to looking for roof defects, mold, or termite damage. If the property had renovations, make sure the necessary approvals and permits for the work are on file so the city doesn't take action against you when you're the new owner. If a problem is identified, get an accurate repair estimate—and be honest about your budget so you know when to walk away.
- See if there are multiple lenders. In some cases, the seller may have more than one loan securing the property. Instead of splitting your offer, mortgage lenders often require full payment of their own debt before the next mortgage can be considered. If your offer pays off the primary lender but leaves only a small amount for the second, the second lender may not agree to the transaction.
- Anticipate higher closing costs. While many buyers and sellers compromise on the costs they assume at closing, lenders usually refuse to pay any additional closing fees. This includes pest inspections, transfer taxes, repairs identified during home inspection, and other costs that buyers may have to pay out-of-pocket.
- Plan for closing delays. Everything in a short sale process must be approved by the lender, which can be a long and frustrating process. It takes several weeks or even months just to get a lender’s response on a purchase offer. If you're buying a home at the same time you're selling your current residence, it may be difficult to coordinate the dates, leaving you to assume the costs of temporary residence until you close escrow.
Use Our Expertise to Your Advantage
Remember, in a short sale, agents and lenders are the only ones who stand to make money from the transaction. A real estate attorney with experience in short sales can anticipate problems before the offer stage, working to secure a home that's within budget and aligns with your best interests.
If you have questions about your home purchase, fill out the short contact form on this page to set up a consultation.