Henderson Franklin Attorneys at Law

Bonita Springs at Bonita Bay

Bonita Bay Executive Center I
3451 Bonita Bay Blvd., Suite 206
Bonita Springs, FL 34134
Phone 239.344.1100

Email Sharon Zuccaro / sharon.zuccaro@henlaw.com

5 Top Contract Tips for Residential Real Estate Buyers

In today’s favorably priced residential marketplace, buyers are wanting to take advantage of the enticing home prices, low interest rates and income tax incentives.  However, buyers who pay close attention to contract terms prior to execution can alleviate additional cost, loss of deposit(s) and emotional stress. 

Buyers should note and be aware that in Lee and Collier Counties, typically there are three (3) utilized forms of sales contracts.  Each one varies in its form and content and some even alert buyers to seek legal counsel prior to signing a legally binding document.  In light of our current economic climate, since buyers are cutting corners to save money or do not have the funds to hire a real estate attorney to review the contract on their behalf, the purpose of this article is to call attention to buyers of some common contract pitfalls. 

What follows are five (5) key contract areas that buyers should understand carefully when contemplating a real estate purchase:

1.                 Loss of Deposits.  A common pitfall for the unsuspecting buyer is the loss of deposit(s) upon the buyer’s contract breach.  Some of the local contract forms provide that if the buyer defaults, the buyer forfeits to seller not just the deposit(s) made to date, but all deposit(s) required to be made under the contract, including future deposits due after the buyer defaults.  Typically, buyers mistakenly assume the deposit(s) at risk are only those previously delivered to the escrow agent.  If a buyer decides to terminate his/her contract, a buyer is urged to consult with an attorney to understand the ramifications of same.

2.                 Financing Contingency.  This contingency affords protection to buyers’ deposit(s) in the event the buyer complies with the specific terms of the provision.  If not, the deposit(s) can be at risk of loss.  Most of the local forms provide for a specific time period for the buyer to make loan application and a requirement that the buyer use reasonable diligence to obtain loan approval.  If the buyer’s loan application is denied, some contract forms require the buyer to document that he/she actually failed to obtain the loan through a statement of adverse client action or that the buyer financially failed to qualify for the financing.

If a buyer applies for a loan in good faith, the buyer is able to usually terminate a contract and obtain a refund of deposit(s) if the property failed to appraise or that the buyer failed to qualify for the loan.  However, a buyer who is denied for other reasons, such as failing to make application or to comply with application conditions, may not be able to use the mortgage contingency to terminate and may suffer loss of deposit(s). 

It is also noteworthy to add that in some of the local contracts, if the buyer does not send notification to seller of loan approval prior to the financing deadline, then the seller may have the right to terminate the contract, unless the buyer waives the contingency within a specified time of receipt of seller’s notice.  One easy way to avoid the contract cancellation while the buyer is still working on loan approval, is to merely enter into a financing contingency extension with the seller, prior to its expiration.

3.                 Inspections.  Many times, after the contract is signed, buyers are dismayed to find that he/she does not have the right to inspect all of the items he/she intended to inspect.  Some of the local forms of contract do not afford the buyer with the right to conduct a mold, radon, Chinese drywall and/or seawall inspection.  These additional inspections must be added to the form contract by rider or addenda.  After the contract is signed, the seller’s written consent, which could be declined, is necessary to inspect anything beyond the scope of the contract terms. 

4.                 Property Condition, Seller Warranties & Mandated Repairs.  Buyers should determine what the contract requires the seller to warrant and/or repair.  Some of the contract forms impose seller warranties of the physical property condition and compel the seller to repair warranted items only up to a maximum dollar amount.  Other contracts allow the buyer to inspect and object if specified property conditions are not met, but does not require seller to warrant conditions or make repairs.  In the event the seller declines to make repairs or the repair cost exceeds the maximum repair cost required of seller, only some contracts allow the buyer to terminate the contract and receive a full refund of deposit(s).

Buyers are encouraged to not only conduct inspection(s) but to do so timely, otherwise Buyers stand to waive the right to object to deficient conditions.

5.                 Homeowner’s Association/Condominium Special Assessments.  The most commonly used real estate contract form in Lee County has no provision  in the contract for condominium/homeowner association special assessments.  To prevent any unforeseen expense, it is recommended that a condominium association disclosure rider or homeowner’s association addendum be incorporated into the contract to address who will pay any association special assessment.

Taking the time to read and understand a purchase contract prior to signing can make the home buying experience more enjoyable and prevent unnecessary and possible expense.  However, buyers are cautioned to seek a real estate attorney if they have contract questions and/or concerns.

Sharon Zuccaro is a real estate attorney with the law firm of Henderson, Franklin, Starnes & Holt, P.A. in Bonita Springs.   Her primary area of practice involves representing developers, sellers and buyers in commercial and residential real estate transactions. More specifically, Sharon concentrates her practice in matters involving finance, contracts, leases, closings and title insurance.  Sharon can be reached at 239.344. 1378 or via email at sharon.zuccaro@henlaw.com.

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Posted March 9, 2010

Printed in Coconut Point Press March / April 2010

By: Sharon Zuccaro

Why Have a Home Inspection?

Sharon Zuccaro is a real estate attorney with the law firm of Henderson, Franklin, Starnes & Holt, P.A. in Bonita Springs.   Her primary area of practice involves representing developers, sellers and buyers in commercial and residential real estate transactions. More specifically, Sharon concentrates her practice in matters involving finance, contracts, leases, closings and title insurance.  Sharon can be reached at 239.344. 1378 or via email at sharon.zuccaro@henlaw.com.

For most individuals, buying a home is not only one of the most significant decisions they will make, but it is also one of their largest purchases. Therefore, it makes good financial sense for the prudent purchaser to ensure that the home he or she wants to purchase is in good condition, especially since most purchasers have concerns, questions or even doubts about the property condition. Purchasers can obtain valuable information through the home inspection process. In addition to a home inspection, purchasers may elect, as applicable, and depending upon their contract terms, to have additional property inspections made for the following: radon, mold, water, septic, lead-based paint, termite, swimming pool and spa, wind mitigation, and Chinese drywall.

Prior to executing a purchase contract for a property, it is critical that purchasers ascertain their inspection rights under the contract. The contract in and of itself, without special addenda, may not afford the purchaser the right to conduct all of the inspections he or she may want to have performed. The contract will normally identify the scope of what may be inspected, who may inspect, time frames to complete inspections, and the seller’s obligation, if any, to remedy problems. Purchasers needing legal assistance in this regard should seek the advise of legal counsel before signing the contract. No one wants to make a costly mistake.

In the event the home inspection report identifies the need for major and/or minor repairs, depending upon the purchaser’s contract terms, the purchaser may be able to (i) require the seller to correct the deficiencies prior to closing, (ii) obtain a reduction and/or credit against the purchase price by the amount of the cost of the repairs, or (iii) terminate the purchase contract.

An additional benefit of a home inspection, is that the home inspection report usually provides helpful information (i) to the purchaser to acquaint them with the home, such as identifying the location of shut off valves, pump switches, heating and cooling filters and breaker panels, and (ii) information about maintaining various aspects of the home and its systems. Purchasers present at the time of inspection also enjoy the benefit of being able to ask questions and educate themselves on how things work around the home. The inspector may also inform them of matters not mentioned in the report that they may want to monitor.

Home inspections are not just for purchasers. Sellers may elect to have a home inspection prior to listing their property with a real estate agent to prevent the occurrence of any future surprises to ensure that they have made full disclosure of facts materially affecting the value of the home.

What Is A Home Inspection?

A home inspection is a thorough visual assessment of a home. The home inspection should be conducted by a certified professional home inspector. It usually entails a walk-through inspection of the home, whereby the property condition is closely examined to evaluate the structure, construction, all major and mechanical systems and appliances. Defects, deficiencies and potential problems are noted and recommendations for repair are made in a comprehensive report. Note, the wind mitigation inspection is special and different than the other types of property inspections, in that it is the only inspection whereby, depending on how hurricane resistant the home is, will determine the amount of savings the purchaser could receive on his or her homeowner’s insurance premium. The homes comprised of significant hurricane construction features, will generate the most savings for purchasers. The wind mitigation inspection will also inform purchasers how to increase the home’s hurricane resistance, which is valuable information in and of itself, and once undertaken, will reduce insurance premiums for the subject property.

In understanding the contractual rights and obligations of the parties with regard to the complex nature of home inspections, consulting with legal counsel may be an exercise in sound judgment to protect your investment.

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The contents of this article do not constitute legal advice, nor do they create an attorney-client relationship.  Should you have any legal questions you should consult with your attorney.  The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and experience.

Coconut Point Press – May / Jun 2010

Design Tips by Georgina Ryan:

The proper paint application can dramatically change the look of a room with very little cost. Paint influences the mood of your home, and even camouflages unwanted imperfections.

But how do you know which finish to choose? This guide will help you decide.

A flat finish has no shine. It is great for walls with nicks and blemishes, as it tends to hide them and make the wall look smoother. A flat finish doesn’t reflect light, so it isn’t the best choice if you want to brighten your room. It is also difficult to clean, so it is best suited for low traffic areas.

Some paint companies offer a matte finish, which resembles a flat finish. It is slightly more durable and easier to clean. It’s still good for camouflaging minor bumps and other small imperfections.

If an area has a little more traffic, you can consider an eggshell finish, which has a slight hint of shine.

For brightening up a room, choose a pearl or satin finish. They are more glossy than eggshell and will reflect light back into your room instead of sucking it up. Pearl finishes are highly washable and stand up to high traffic. But imperfections in the wall will stand out.

Semi-gloss paint is used most often on trim, doors, and cabinets. It has a nice, subtle shine, and washes easily. Extra care must be taken with wall preparation, since imperfections are highlighted by a semi-gloss surface.

High gloss paints offer wash ability and durability with their reflective, shiny finish. Glossy paints are not often used on interior walls, but they are a dramatic look for cabinets, trims, and even furniture. A high gloss finish will exaggerate and magnify surface imperfections, so careful preparation is essential.

Whether you are updating one room or redecorating your entire house, paint is a simple, inexpensive way to achieve a striking new look.

Georgina

Ryan Design Group 3333 Renaissance Blvd Suite 226, Bonita Springs
FL 34134, www.ryandes.com phone: 239 992-5808 fax: 239 992-4202