Category Archives: Real Estate Blog

Personal Story

Many people do not hire an attorney to assist them with their closing nor do they recognize the benefit of choosing a law firm as the title company. However, I learned the hard way and realized too late that I should have had an attorney on my side.
Here is my story so you can learn from my own personal experience. It was the purchase of my second home and my husband and I were on top of everything; very involved in the purchase. The home we were purchasing was a beautiful country home on 2.5 acres. To gain access to our home, you turn off a paved street onto a long dirt road. It was a typical country home that was fairly secluded and only had two other houses along the dirt road before you reached ours.
Nothing was alarming to us. The inspection came back ordinary, despite a few minor things. The survey was descriptive and did not raise any concerns. My husband and I were getting very anxious and ready to move in! The day we arrived at the title company to close on our new home, I can recall signing tons of documents. They were overwhelming and I felt pressured. There was no way I could read everything nor did I understand everything that I was signing. My husband and I were just excited to get the keys! I did not comprehend what a title policy covered or what a lender’s policy was, but I put my trust in the parties to advise me if needed.
A few months passed and we were truly enjoying our new home. However, the long dirt road we traveled to get to the house started to form major potholes. As each day passed, the potholes became worse and worse. My husband and I called the county to see if they would fill in the potholes or pave the road. However, the count informed us, for the first time, it was a private road and that they were not responsible for its maintenance. We were shocked!
We had no choice but to start maintaining the long dirt road. We began by buying rocks and dirt in order to fill the potholes. It was never ending and time-consuming. We were continuously re-filling the potholes trying to smooth out the dirt road. This continued for months and months. Paving the road was no where in our budget and quite honestly, neither was buying rocks and fill.
After we finally had enough, I contacted a real estate attorney. She asked me for my closing documents and my title policy. The funny thing is, I had my closing documents and never received my title policy after the closing. I had to call the title company and ask them to send it to me. The attorney looked at my documents and my policy. She showed me that the dirt road was listed on my policy; it had a list of exceptions that were not covered by the policy and the dirt road was one of them.
Unfortunately, the policy stated it would not cover an agreement that was recorded in a certain book and page in public records. My attorney pulled that document up and she showed me a contract between adjoining neighbors and the first homeowners (which passed to us), that stated all the neighbors shared the responsibility of maintaining the dirt road. If I would have hired an attorney to assist with my closing or a law firm to conduct the title closing, this would have been carefully reviewed with me, and my husband and I would have known what we were purchasing.
Now that we know, we have asked the neighbors for their contribution and, at least, we are not carrying the road burden ourselves. What we learned, however, is that title work is not easy to understand. You need someone who is experienced so you clearly understand what you are buying, and someone who knows the law. We also learned that not all attorneys charge attorney fees at closing. They charge the same price as a title agent, but you get the benefit of an attorney assisting you.
Don’t take the chance because you never know what issues might arise. You need representation and help from a real estate firm. Let them conduct your title closing, so you are fully aware of all the documents you are signing and you don’t get any surprises!
E.J. and B.V.

HOA Dues

What can I do to stop my HOA dues from increasing?

Unfortunately, when an HOA is faced with many non-paying homeowners and potential deficit spending, they must raise the HOA fees or hit the homeowners with an assessment.  Most HOAs derive that kind of authority from the Association documents recorded on the real property.  Typically, if the increase is uniform and is implemented in the manner required by the HOA documents, the HOA likely has authority. (There may or may not be a homeowner approval requirement to impose such an increase.)

If you are faced with an assessment or an increase in fees and you do not pay, the HOA generally will have the right to put a lien on your property.  The HOA’s lien is governed by Florida law and the HOA’s documents.  If a lien is filed on your property, the association could file a foreclosure action and attempt to collect the lien by forcing the sale of your home.

Failure to pay, comes with many drawbacks, including late charges, interest, and attorney’s fees for collecting the fees.  If you can pay, you should do so.  Moreover, a better choice would be to pay and get involved with your Association in its efforts to manage the property and collect from the owners who are not paying.

You could get on a committee set up by the HOA to contact and work with non-paying owners, or you could run for a position on the HOA’s Board where you would then become one of the decision makers. In the current economy, HOAs are having more problems with non-paying owners.

For the homeowners that pay, an increase in dues often means a short-term increase in fees to keep the property maintained and preserve property values. Dedication by actively engaged homeowners who are paying their HOA dues regularly, will help put the HOA in a better financial position than than those who are not.

Call our office today to see how we can assist you with your real estate needs at (727) 938-2255.

Real Property Interests


Freehold estates are possessory interests in land of indefinite duration. The duration of a freehold estate may, however, be limited by a condition. If there are no conditions that limit the duration, then the property interest is in fee simple absolute. If the property interest can be cut short by the occurrence or non-occurrence of an event or other condition, the interest is one of the defeasible fee simple estates. If the property interest terminates upon someone’s death, it is called a life estate.


Fee Simple Absolute – An interest in fee simple absolute is a fee simple estate, and has no conditions attached to it that could possibly cause its termination. In other words, it is the maximum possible ownership interest known under this country’s system of laws. It is an estate that is possibly infinite in duration.


Fee Simple Determinable – An interest in fee simple determinable is a fee simple estate that terminates automatically by the occurrence of a special limitation. These limitations use durational language like: “until,” for so long as,” or “while.” Upon the occurrence of the special limitation the ownership interest automatically reverts to the transferor.

Fee Simple Subject to Condition Subsequent – An estate in fee simple subject to a condition subsequent is similar to a fee simple determinable in that it can be terminated upon the occurrence of an event or condition. These limitations use conditional language like: “provided that,” “but if,” or “on condition that.” Unlike a fee simple determinable, this fee simple interest does not terminate automatically. Instead, the transferor must take some overt action to retake ownership of the property.

Fee Simple Subject to Executory Limitation – An estate in fee simple subject to executory limitation is very similar to the two defeasible fee simple interests discussed above. However, unlike the others, a third party holds the future interest. Upon the occurrence of the terminating condition the possessory interest automatically transfers to the third party.


Life Estate – A life estate is also a freehold estate. The duration of a life estate can be measured by the life of the grantee, or by the life of another person. A life estate is automatically terminated upon the death of the measuring party, regardless of whether that person is currently in possession of the property.


A concurrent estate exists if more than one person shares an interest in property at the same time. Concurrent owners are referred to as cotenants. All concurrent estates require a unity of possession, meaning that all cotenants are entitled to use, control, and possess the property.


Tenancy in Common – Tenancy in Common is the most frequent form of a concurrent estate, and is the default estate for unmarried cotenants. This concurrent estate only requires unity of possession, meaning all tenants are entitled to possession or control of the property. A person does not need to be in actual possession of the property to be a cotenant. The other unities discussed below are not necessary to create a tenancy in common.

Joint Tenancy – A Joint Tenancy is a concurrent estate that requires four unities: possession, interest, time, and title. This means that the joint tenants’ must have an equal right of control or possession of the property, have an equal interest in the property, and must all receive their interests at the same time and in the same instrument. In addition to the four unities, a joint tenancy also must include a right of survivorship.

Tenancy by the Entireties – A Tenancy by the Entireties, much like a Joint Tenancy, requires the four unities of possession, interest, time, and title. Tenancy by the Entireties also requires the unity of marriage; this means that the cotenants must also be husband and wife. Tenancy by the Entireties is the default concurrent estate for property jointly owned by a married couple; however married couples may also have the concurrent interests discussed above.


Leasehold estates are of fixed duration. The lessee, commonly referred to as tenant, receives possession of the property for a fixed period of time according to the terms of his agreement. However, ownership of the property remains with the lessor, commonly referred to as landlord.


Tenancy at Will – In Florida, any lease entered into orally results in a tenancy at will.[i] The duration of a tenancy at will is determined by the period in which payments are made; if payments are due every week then the duration is week to week, if payments are due monthly then the duration is month to month, etc.[ii] A tenancy at will can also be created by written agreement if its duration is determined by the payment periods.[iii]


Periodic Tenancy – A periodic tenancy automatically continues for successive periods unless a party gives notice to terminate the agreement.[iv]

Tenancy for Years – A tenancy for years has a known duration at the time of creation.[v]  The duration can be for any amount of time (days, weeks, months, or years).[vi] A tenancy for years terminates upon the expiration of the lease term.[vii]

Tenancy at Will – A tenancy at will (discussed above) can also be created by written agreement if its duration is determined by the payment periods.[iii]


Tenancy at Sufferance – A tenancy at sufferance occurs when a person who was in lawful possession of property remains after the lease expires. [viii]  Continued payment does not renew the lease, but if the landlord provides written consent then the tenancy becomes a tenancy at will.[ix]


If an interest in real property can be cut short by a condition, another person will have what is known as a future interest in the estate. This means that on the occurrence of the limiting condition, another person will receive a possessory interest in the property. This can occur automatically, but, depending on the type of estate may also require an overt act by the person who owns the future interest.


Because an estate in fee simple absolute cannot be cut short by any sort of condition, there is no future interest attached to an estate in fee simple absolute.


Because there is a chance that an estate in fee simple determinable will be cut short by the occurrence of this special limitation, the transferor retains a future interest in the property called a possibility of reverter. A transferor in possession of a possibility of reverter does not need to exercise a power of termination; the prior estate is terminated automatically upon the occurrence of the special limitation.


Because there is a chance that an estate in fee simple subject to condition subsequent will be cut short by the occurrence of this limitation, the transferor retains a future interest in the property called a right of entry or a right of termination. A transferor must exercise his or her right of entry (or termination) in order to regain possession of the property.


Because there is a chance that an estate in Fee Simple Subject to Executory Limitation will be cut short by the occurrence of this limitation, the transferor retains a future interest in the property called an executory interest. A third party who has an executory interest does not need to exercise a power of termination; the prior estate is terminated automatically upon the occurrence of the terminating condition.


There are two future interests that can follow a life estate. If upon the death of the measuring life, the possession of the property reverts back to the grantor then the future interest is called a reversion. Alternatively, if upon the death of the measuring life, the possession of the property transfers to a person other than the grantor, then the future interest is called a remainder.


If an interest in real property is owned as Joint Tenants or as Tenants by the Entireties, then there is a right of survivorship. This means that if one of the tenants dies his or her property will be distributed to the other tenants. If a joint tenant dies, the deceased tenant’s interest is distributed equally among the surviving joint tenants. If a spouse dies, the surviving spouse will receive the deceased spouse’s interest.


A right of survivorship is present only if the express language of the conveying instrument includes a right of survivorship.[i] “’Section 689.15, Fla. Stat., F.S.A., abolishes the right of survivorship in real and personal property held by joint tenants except in cases of estates by the entireties or in tenancies in common where the instrument creating the estate shall expressly provide for the right of survivorship.’”[ii] This means that the right of survivorship must be created by express language on the conveying instrument.[iii]


No, the right of survivorship can be included despite a missing unity.[iv] The real issue is not whether all unities are present but instead whether the grantor intends on including a right of survivorship.[v] If an instrument expressly provides for a right of survivorship, then it is irrelevant that one of the unities is lacking.[vi] Thus, if the express language of the instrument includes a right of survivorship, it is unnecessary to consider the other unities.[vii]


Survivorship language is unnecessary to create a right of survivorship between spouses, because by default property conveyed to a married couple, is conveyed as tenants by the entireties.[viii] “’A conveyance to spouses as husband and wife creates an estate by the entirety in the absence of express language showing a contrary intent.’”[ix] Thus, including survivorship language in a deed transferring property to a married couple would be redundant.[x]


A Tenancy by the Entireties becomes a tenancy in common upon divorce.[xi]

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Benefits of Purchasing a Land Trust

A land trust is a legal device for holding any interest in real property in which legal and equitable title is transferred to a Trustee. There are several advantages to holding property in a land trust. Among the most prominent are:
• Probate avoidance
When property is placed in trust it is no longer legally owned by the trustor (original property owner who placed the property in trust). Therefore, when the Trustor dies, the trust property does not constitute property owned by the Trustor at death. Instead, it will pass and be governed solely by the terms of the trust, as opposed to facing a lengthy and costly estate and administration process.
• Privacy
The placing of property in a land trust is done by deed from the Trustor to the Trustee. Oftentimes, the Trustor is also a beneficiary of the land trust, however, only the name of the Trustee is associated with the property in the county recorder’s office. Land trusts are nifty ways of keeping a property owner’s and beneficiary’s status shielded from the public eye.
• Tax benefits
Property placed in a land trust may be taxed by that initial transfer, but there are specific provisions in the Internal Revenue Code providing for exceptions. In any event, all subsequent transfers occurring thereafter to successor beneficiaries while the property is held in trust are shielded by the trust from further taxation.
• Simpler transfers
Trust agreements can provide specific terms regarding how and when property is to be transferred and the Florida Land Trust Act accommodates for multiple beneficiaries and the various ways they can share title to the same property. Properly drafted trust agreements, tax benefits, and probate avoidance are all further reasons as to why transferring property held in a trust is much simpler than if it were held otherwise.
• Easy management
Property interests held in a land trust can be easily financed, sold, or otherwise managed without the formality of deeds, notaries, seals, or county recording.

There are a series of other benefits to hold property in a land trust. Our attorneys are happy to answer your questions and assist you in maximizing your goals through a land trust.

THE FLORIDA LAND TRUST ACT – §689.071, Fla. Stat. (2013).

Land trusts in the State of Florida are created by statute under the Florida Land Trust Act (FLTA). All land trusts executed in the State of Florida must comply with the terms of this statute. The FLTA addresses the specific rights, liabilities, and duties of trustees and beneficiaries, appointment of successor trustees and beneficiaries, applicability of other law and the Uniform Commercial Code, perfection of security interests, and the type of interests held by trustees and beneficiaries in land trusts, among other topics. Contact our attorneys to learn how your goals in a land trust are impacted by the FLTA.

Here is a link to the Florida Land Trust Act:


Yes. The Florida Land Trust Act lists four specific powers and authorities to be accorded to a Trustee in a land trust. If these powers and authorities were not accorded to a Trustee, the trust is not a land trust governed under FLTA.

If a trust was created before June 28, 2013, it will be governed by FLTA if the trust instrument confers on the Trustee the powers and authorities mentioned above and either expressly provides that the trust is a land trust or demonstrates the intent of the parties for the trust to be a land trust. If trusts created prior to June 28, 2013 state they are to be governed by chapter 736 or any other trust code or law besides FLTA, or the intent of the parties demonstrates so, the trust will be out of the purview of FLTA.


A land trust is intended to hold interests only in real property. This does not mean that you must have full ownership rights over a piece of property to place it into a land trust. The FLTA defines a beneficial interest as “any interest, vested or contingent and regardless of how small or minimal such interest may be, in a land trust which is held by a beneficiary.” Thus, leaseholds to mortgagee interests to full perfect title can be held in a land trust. Click here to read more about real property interests.


It depends. Any trust, including a land trust, can be revocable or irrevocable, and there are a series of advantages and disadvantages associated with each. Depending on the status of your current trust, your general donative intent, and, if applicable, your testamentary scheme, holding property in a land trust as opposed to another may or may not be a wise decision. Among other things, and revocability aside, holding real property in a land trust might be more advantageous if you are concerned with property being held under your name or if there are multiple owners or business transactions related to the property so as to keep the subject property in exclusive management under a single land trust. Call our office to learn from our attorneys whether a land trust is the best option for you.


There are two documents required to create a land trust: a deed and a trust agreement. When one creates a land trust, he or she transfers, by deed, real property to the trustee to be held in trust and executes a trust agreement that outlines who the Trustee(s) and Beneficiary(ies) are, the scope of the Trustee’s authority, and the general terms of the trust, including how the subject property is to be managed and among other instructions and conditions. The deed must be recorded and the Trustee must be conveyed specific powers and authorities laid out in the Florida Land Trust Act.

We encourage you meet with one of our attorneys to discuss the creation of a land trust. Given the particularity of the FLTA and its distinction from the ordinary Florida Trust Code, it is important to make sure a land trust is created properly and governed under the appropriate provisions of Florida law. Our firm can assist you with executing a deed in trust and trust agreement that will clearly outline the rights and duties of designated trustees and beneficiaries, fulfill your needs and goals, and properly manage any risk associated with your property.


A Trustee is the person or entity responsible for managing the trust property. There can be multiple Trustees (or Co-Trustees) to the same trust. A Trustee can be a natural person or a business entity. A Trustee holds legal and equitable title to the trust and is the only person who can take any action concerning the property. A Trustee can only act under the direction of the beneficiary(ies) and has no authority to make any decisions concerning the trust property on his or her own accord. In essence, the Trustee is a fiduciary who holds legal and equitable title to the real property for the benefit of the beneficiary and acts according to the direction of the beneficiary assigned to the trust. The Trustee acknowledges that he or she understands the rights and responsibilities as a fiduciary to the Trust and beneficiary(ies) and, accordingly, that the Trustee should file I.R.S. Form 56 notifying the I.R.S. of the creation of a fiduciary relationship under section 6903 and giving notice of qualification under section 6036.

Our firm provides Trustee services for land trusts so you can ensure your trust property is managed by an entity that is responsive, reliable, and knowledgeable about land trusts and the FLTA.


A Successor Trustee is the person or entity who is next in line to serve as Trustee in the event the Trustee is unable or chooses not to serve as Trustee. The Successor Trustee has no authority or title to the trust while still a Successor Trustee.


A beneficiary is the person who holds a beneficial interest in the land trust. Unlike an ordinary family trust where the Trustee has mandatory or discretionary authority according to the terms of the trust, the Trustee in a land trust has no authority except to follow the directions of the beneficiaries regarding the handling of the trust property. This is what the Florida Land Trust Act calls the “power of direction,” and it rests only with the trust beneficiaries. The Beneficiary is also fully entitled to all beneficial interests of the trust property, such as earnings and other proceeds the property generates while in trust and the option to occupy or otherwise possess the property.

The beneficiaries of a land trust can be anyone the trustor (creator of the trust) chooses, even the trustor him/herself. It is usually in the best interest of a beneficiary to hold his or her beneficial interest in the name of a business entity, such as a corporation or limited liability company, so the beneficial interest can have the same protections offered those entities should the beneficiary ever face the risk of liability.


One of the unique features of a land trust is the ability of a beneficiary to hold either a real or personal property interest in real property held in the land trust. According to the Florida Land Trust Act, any land trust conferring personal property interests to the beneficiaries must explicitly state so in the trust documents. If there is no specification as to the type of beneficial interests in the trust, Florida law will presume they are real property interests.

The main incentive for a beneficiary to have a real property interest in a land trust is if the trust property is the beneficiary’s homestead. Holding property in a land trust does not interfere with qualification for the homestead tax exemption. In most other circumstances, personal property interests are preferred. If the interest is personal property, beneficiaries can easily assign their interests without a deed, the trust property cannot be partitioned, and ancillary probate administration for out-of-state residents can be avoided. Personal property interests provide other tax and asset-protection benefits, as well.


Under the Florida Land Trust Act, Trustee and Beneficiary interests are “separate and distinct” from one another, unless another law specifies otherwise. Thus, any actions or encumbrances affecting one have no effect on the other.


FIRPTA is a tax law passed in 1981 that requires foreign persons to pay U.S. income tax on the gains they make from selling U.S. real estate. The duty is on the U.S. national buyer (and not the settlement agent) to deduct and withhold a portion of the sales price and report the sale to the Internal Revenue Service (IRS). Buyers can withhold less than the statutory amount if they obtain a determination of the specific amount of tax owed by the foreign national using IRS Form 8288-B. In most cases, the settlement agent is the party that actually remits the funds to the IRA, but the buyer is held legally responsible. Additionally, until the tax is paid in full, the government obtains a security interest in the real property.

For more information, please click here.


My client wants to sell their condominium unit, and I am concerned because many of the units are owned by the same entity, presumably an investor. Are there any laws that may affect how I advise my client in this situation?

Yes, in fact Florida law was recently changed to provide additional protections to condominium owners and to make it more difficult for developers and bulk owners to terminate condominiums. Therefore, whether your client is looking to sell or purchase a condominium unit, these changes should be taken into consideration when deciding whether to move forward with the deal.

In making condominiums more difficult to terminate, the law now states that a plan for termination of a condominium can be blocked if at least 10% of the total voting interests affirmatively reject the plan by voting against it or providing written objections. If the 10% threshold is met, no vote on a plan for termination may take place for the next 18 months. Also, be aware that no voting interest may be suspended for any reason when considering a plan for termination—not even for delinquent assessments.

The additional protections for condominium owners kick in when a “bulk owner,” meaning one who holds at least 80% of the voting interests, exists at the time the plan for termination is recorded. In this situation, owners are now guaranteed at least the fair market value of their unit if a termination occurs. Owners who purchased their unit directly from the developer, rejected the plan for termination, and whose unit has homestead exemption must be paid at least their original purchase price as long as they are current on their assessments and any mortgage on the unit. All other owners must be paid at least the fair market value of their unit, as determined no earlier than 90 days before the recording of the plan for termination. In addition, all owners whose unit has a homestead exemption must also receive a relocation payment equal to 1% of the termination proceeds allocated to their unit.

Owners will now also have their first mortgage satisfied in the event of a bulk owner termination if they are current on all assessments and obligations to the association and all mortgages on their unit. The plan for termination must include satisfying first mortgages on units, though the amount paid to satisfy a first mortgage must not exceed the amount of proceeds allocated to that unit under the plan. However, even if the proceeds from the termination are not sufficient to satisfy the first mortgage, the mortgage will be deemed satisfied when the mortgagee receives either the proceeds allocated to the unit under the plan or the outstanding balance of the mortgage.

Another protection is that owners who occupy their unit may choose to lease back their unit for up to 12 months following the effective date of a termination involving a bulk owner. However, owners must request to lease their unit within 90 days after the plan for termination is recorded and sign a lease within 15 days of being presented with one. Otherwise, they will be required to vacate the unit.

Due to these changes, it is very important to know the fair market value of a unit and if a bulk owner does or could soon exist when determining whether to buy or sell a condominium unit.

– Contributed by Jonathan Northington. Jonathan is a member of the Bay Area Real Estate Council ( and is a real estate and business law attorney at Davis Basta Law Firm, P.A.

Can I rent my property if it is homestead property in Florida?

Engaging an attorney as you plan and proceed is essential on this issue, because the laws and application of the laws vary depending on whether there is a rental, lease, or license, in addition to other case-by-case details. In addition, it has been argued that the rental statute (Fla. Stat. §212) can be considered ambiguous and does not provide homeowners with concrete guidance. These ambiguities are compounded by the nuances in court’s decisions in this area.

With many title companies closing their doors, are you wondering where to get title polices and who can do your closings?

The spiral downturn in the real estate market caused title companies to take an especially hard hit.  Brokers and their agents, who once relied on their favorite title company, are now faced with the task of searching for a new place they can trust.  They need a place to bring their closings and a place that can issue that necessary title policy.  I know of such a place.  It’s your local real estate attorney.

During the real estate boom there was so much work for everyone that real estate professionals, more often than not, looked to the closest and best title company to assist them with their closings.  Once they developed a relationship with that certain title company, they did not need to look anywhere else for quality closings.

For this reason, many brokers and their agents have never had the opportunity to work with a real estate attorney.  Unlike title companies, many real estate attorneys were able to weather the real estate crash by assisting individuals with short sales, loan modifications, foreclosures and civil lawsuits.  Now as the real estate market starts to slowly climb back, those without their trusted title company should consider taking their business to a real estate attorney.

Most attorneys who specialize in real estate law usually have the ability to write a title insurance policy and conduct closings.  More importantly, if legal issues arise, they are capable of expediently resolving these issues before crucial deadlines that can sometimes make a deal fall completely apart.

While many states, require the services of a licensed attorney for all real estate transactions Florida is not one of those states.  In Florida, an attorney is not required for the issuance of a title policy or to close real property.  Notwithstanding that fact, many Florida brokers realize the value of having a real estate attorney at closing and wouldn’t think of doing it any other way.

Still some Brokers may be reluctant to take their real estate matters to an attorney.  It is a common misconception that it is more expensive to get a title policy or have a closing conducted with an attorney.   However, the cost of title insurance in Florida is promulgated, which means that the rates for that type of insurance are set by the State.  Therefore, it is the same price for the policy regardless of who does the issuing.  More importantly, having a real estate attorney on your side may actually save money.

A real estate attorney has typically reviewed hundreds of real estate documents.  They are familiar with titles to real estate and real estate transactions in general.  They know what to look for and how to spot and avoid potential problems.  Most importantly, a licensed attorney is the only person who can give you legal advice.

Give us a call and  tell us about your next deal.  You will be pleasantly surprised to find our doors are open and we will be pleased to issue that title policy and close your transaction.


If you purchase a foreclosure home and there is a tenant on the property you should provide them with the 90 day notice as soon as possible. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. No. 111-203, 124 Stat. 1376, 2204 (2010)) amended the Protecting Tenants at Foreclosure Act of 2009 (“PTFA”) to further define the date of notice of foreclosure as the date which complete title to the property is transferred; therefore, a new owner must have the Certificate of Title before providing a 90 day notice to a tenant. While determining if the tenant has a “bona fide” tenancy, it is good practice to provide the 90 day notice immediately once the Certificate of Title is issued.

It is important to understand that there are people who are taking advantage of the PTFA. Some homeowners will create a lease that is largely in favor of the tenant and charge a minimal rent rate and rent the property to friends or family.  The PTFA has addressed this in the Act.  It makes clear that it only provides protection to certain types on individuals residing on the property. The PTFA specifically states:

The protections of this law apply to tenants under a “bona fide” lease or tenancy. A lease or tenancy is “bona fide” only if: (1) The mortgagor or a child, spouse, or parent of the mortgagor under the contract is not the tenant; (2) The lease or tenancy was the product of an arm’s-length transaction; (3) The lease or tenancy requires the receipt of rent that is not substantially less than fair market rent or the rent is reduced or subsidized due to a federal, state, or local subsidy.

(Pub. L. No. 111-22, Div. A, Title VII, 123 Stat. 1632, 1660-62 (2009)).

If you are thinking about purchasing a property at a foreclosure sale, it is really important to do adequate research to determine if there is anyone residing on the property because tenants do have protections under the PTFA.  Be aware too that if you purchase a property that someone resides in, it may take extra time and money to evict or eject the tenant.  On the flip side, if you are looking to rent the home you purchased, you may end up with a great tenant who is ready to pay you rent, without having to do any more work on your own!

Danielle can be reached at [email protected]

WHAT EVERY REALTOR SHOULD KNOW: The Dodd-Frank Act and its impact on real estate

1. What is the Dodd-Frank Act? It is a law passed in 2010 and named after Barney Frank, a former congressman from Massachusetts and Christopher Dodd, a former senator from Connecticut, who sponsored the law. The law’s primary purpose was to address the excesses in the marketplace which led to the real estate bubble and subsequent collapse, and specifically, to provide legislation that would eliminate the taxpayers bailing out “too big to fail” banks and financial institutions.

2. What is in the law? The scope of the law is enormous. The law itself is 848 pages and the regulations interpreting and enforcing the law are in excess of 14,000 pages. Congress was not only concerned about taxpayer bailouts but was also concerned with “predatory lending” to consumers. As a result, banks, financial institutions and even individuals who lend money to consumers and take as security a mortgage on a primary residence are covered by the law.

3. How does the law affect real estate locally? Banks and other financial institutions have huge regulatory burdens to overcome to assure that the loans which are made satisfy the criteria established in the law. Sanctions for violations of the law are extremely punitive and for the most part, banks will err on the side of caution when deciding whether to make a loan to a customer on a primary residence. The net result is higher bank fees and fewer loans made as a result of the regulatory costs and thresholds placed on banks.

4. How does the law affect individuals? Sellers financing the sale of their own property are covered under the rule. Thus, if you are representing an owner who is willing to hold the mortgage on the sale of his or her property, you must make sure the attorney or title company closing the transaction is aware of the regulations of Dodd-Frank. In short, one who owns property can finance the sale of 3 properties on any one 12 month period. However, the seller must not have constructed the home under contract, the financing must be fully amortizing (no balloon mortgages!) and the loan must have a fixed interest rate or an adjustable interest rate with “reasonable” lifetime limits on rate increases. The rule is better if the seller is only financing one home in a 12 month period as the mortgage can contain a balloon provision.

5. What if I want to finance the purchase of a residence from my child or other family member? You can’t do it. The type of financing is not allowed under Dodd-Frank.

6. What are the sanctions for a violation of Dodd-Frank? There are several but one is a $1,000,000.00 a day fine.

7. What are exemptions or ways to avoid Dodd-Frank? Forget about it-there aren’t any absent conventional financing, financing through a mortgage broker or complying with the limited owner financing rules mentioned above.

This Article was sponsored by the Bay Area Real Estate Council (BAREC) and written by Richard “Rick” A. Miller. Rick, a Board Certified Real Estate Lawyer, is a Board member of BAREC and a Managing Partner at Miller, Crosby & Miller, P.A., 2323 South Florida Avenue, Lakeland, FL 33803. Rick may be reached at (863) 688-7038.