Posted on Friday, June 23rd, 2023

real estate agents and customers shake handsWhen you gain ownership of real property, certain legalities can cost you money if you do not address them upfront. As an experienced investor or real estate professional, you may not think you have a need to hire an attorney; however, residential and commercial real estate acquisitions are sometimes complex, so it is advisable that you consult with an attorney before you close on your next investment.

Many government agencies track real estate acquisitions, so having experienced attorneys at Nishad Khan, P.L. confirm that all processes are properly followed in your closing is worthwhile. Often, we spot issues that may leave you vulnerable and we can suggest alternatives to address any of these issues that may arise. Further, we ensure that all proper transfer fees and taxes are addressed at closing, so that no person or government agency comes back after the closing to ask for more money.

Review Documents Involved in Real Estate Acquisitions

Many documents are used in real estate transactions; however, some of the standard documents you will see involved in real estate acquisitions are the sale and purchase agreement, the deed, the FIRPTA affidavit (if applicable), and the title clearing documents. Having an Orlando, Florida real estate attorney review these documents avoids confusion and misunderstanding that can lead to costly court proceedings.

  • Sale and Purchase Agreement: This is usually the first document signed by the buyer and the seller. It contains the description of the property, the purchase price, the required deposit, the closing date and the material terms. The sale and purchase agreement also contains certain contingencies that the buyer may require and certain warranties that the seller may offer. Each party will have certain obligations, outlined in the agreement, that will need to be met before the parties can close. If those obligations cannot be timely met, the parties will either: (i) amend the agreement to permit for additional time to satisfy those obligations, or (ii) terminate the agreement.
  • Deed: The Deed will be signed by the Seller at closing. The Deed will serve to convey the property to the Buyer. In a traditional purchase and sale closing, the Deed will likely be either a General Warranty Deed or a Special Warranty Deed. In a General Warranty Deed, the Seller will fully warrant title to the property against the lawful claims of all persons whomsoever. In a Special Warranty Deed, the Seller will fully warrant title to the property against all persons claiming by, through or under the Seller. It can be quite confusing, so having experienced attorneys at Nishad Khan, P.L. review your Deed for your closing is worthwhile.
  • FIRPTA Affidavit: In the United States, all Sellers are presumed to be foreign sellers, unless the presumption evidence can be provided to the contrary. When a foreign seller sells U.S. real estate, the foreign seller is subject to 15% of the sales price being withheld at Closing. Generally, this withholding must be sent to the IRS no later than 20 days after Closing. Given that a seller’s foreign status is presumed, this must be addressed for every closing. One exception to this withholding requirement is the Seller FIRPTA Affidavit. In this circumstance, if applicable, the Seller can provide the Closing Agent with a certification, under penalty of perjury, that the Seller is not a foreign person. This FIRPTA Affidavit, provided by the Seller, should contain certain required information, such as the Seller’s name, the U.S. taxpayer identification number, and the Seller’s home or office address.
  • Title Clearing Affidavits: The commitment to insure title for the real estate will contain certain requirements that the parties will need to satisfy before Seller can close and convey clear title. Some of those requirements may require certain affidavits for the purpose of establishing certain facts. Examples of types of title clearing affidavits, may include, but are not limited to, the seller or buyer affidavit, which affirm that no action has been taken that could jeopardize the status of clear title, the continuous marriage affidavit, which affirm that the parties were continuously married while they owned the property, and the death certificate affidavit, which affirms the passing of an interested party.

Acquiring a residential or commercial property involves many legal complexities. So, set up an appointment with Nishad Khan, P.L., to thoroughly review all the documents. This will give you one less thing to worry about during the real estate acquisition process.

Consider Investment Risks

It is important to consider the risk of a residential or a commercial real estate acquisition. By asking the right questions ahead of time, you can avoid many of the issues that drag out the closing process.

As part of your due diligence during the buying process, if applicable, request profit and loss statements, utility statements, real estate taxes, rent rolls, and maintenance invoices, that indicate the financial and the physical condition of the property. You can, sometimes, use this information as further negotiating points, to request additional contingencies or to walk away from the deal, if necessary.

Perform Due Diligence

Performing due diligence during the buying process is very important. Dependent on the property type, certain due diligence matters, such as: (i) conducting certain types of property inspections, (ii) ordering title, permit and municipal lien searches, (iii) confirming zoning classification, and (iv) completing a survey, are vital in ensuring you are getting what you are paying for. A real estate acquisition attorney can help you understand the overall condition of the property you are purchasing. Because each closing is different, working with a law firm that can help you prevent future legal difficulties is essential.

Identify Financing and Closing Costs

If you plan on seeking financing to fund your Closing, you will need to include a contingency in your sale and purchase agreement to permit for cancellation in the event that lender financing is not obtained within a set timeframe. An approval letter from your lender is required to keep the process moving. Showing you have approval makes it easier when submitting an offer to purchase property, because it confirms that you already have your financing in place for closing. Skipping this step may cause delays due to securing financing for the deal.

As a buyer, you can expect to pay for the following items and services:

  • Real estate agent transaction fees (buyer)
  • Recording fees
  • Lender title insurance policies
  • Documentary stamp tax and intangible tax on the loan
  • Own legal costs
  • Due diligence costs for building condition reports, environmental assessments, survey, and valuation appraisals
  • Due diligence inquiries to government bodies
  • Association application fees, transfer fees or assessments
  • Home warranty costs

Contact Nishad Khan, P.L.’s experienced real estate lawyers in Orlando, today to discuss your real estate acquisition concerns. Our real estate, estate planning and business attorneys will combine forces to provide the legal services you need to protect yourself against potential legalities during the real estate acquisition process.