Purchasing a home is a significant milestone, but the process comes with its share of complexities, especially when it comes to the property’s title. In Florida, the buyer’s rights in the event of unforeseen title issues are usually determined by the terms of the written contract. Let’s delve into this topic, focusing on the standard Florida Bar Florida Association of Realtors (“FARBAR”) contract that governs most residential real estate transactions in Florida.
Title Insurance Commitments and Exceptions to Coverage:
In residential purchases, the buyer is usually provided with a “Title Commitment” from its title insurer a few weeks prior to closing. The commitment may list certain “exceptions” to coverage based on issues the insurer discovered during its search (ex: code violations).
The FARBAR contract outlines the buyer’s rights relating to title issues discovered in the title commitment, giving the buyer a window of 5 days after receiving the Title Commitment to review it.
Notice and Opportunity to Fix the Issues:
The contract specifies that the buyer, upon finding defects that render the title unmarketable, must notify the seller in writing within the stipulated 5-day period. If the seller receives the notice, they have a 30-day Cure Period to take reasonable diligent efforts to rectify the defects. If the defects are cured within this period, the parties proceed with the closing.
However, if the buyer fails to request the defects be cured during the 5-day period, they may waive their right to have the issues resolved, and may be forced to purchase the property with the title issues still existing.
Hypothetical Example – Code Violations on a First Time Purchase:
Consider Sarah, a first-time homebuyer excited about her new Florida property. During the title examination, the report reveals code violations that need attention. Sarah, following the FARBAR contract, should notify the seller in writing within the 5-day window to retain her right to have the title issues fixed.
However, if Sarah fails to request the cure during this period, she might be held to her commitment to close. In such a scenario, negotiations become more challenging, and Sarah may have limited options to address the code violations before closing.
Summary:
Understanding buyer’s rights in the event of title issues is vital for anyone navigating the Florida real estate market. The FARBAR contract provides a structured framework, giving buyers the flexibility to address unforeseen challenges and make informed decisions. It is crucial for buyers to be proactive during the 5-day examination period to identify and request the cure for any title issues. Failure to do so might result in a commitment to close, even in the presence of defects.
DISCLAIMER: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.
READY LEGAL 