Florida Home Buying Terminology Every Buyer Should Know Before Closing

Navigating a real estate purchase in Florida can feel overwhelming, especially with the jargon thrown around during the process. From earnest money to the final deed, understanding key terms empowers you to make informed decisions, spot issues, and close with confidence. At Munizzi Law Firm, we educate clients on these essentials to ensure smooth transactions and protect their interests. This guide defines and explains critical home buying terminology, focusing on what happens before and at the closing table.

Earnest Money

Earnest money is a good-faith deposit (typically 1-3% of the purchase price) made by the buyer shortly after contract acceptance. It's held in escrow and credited toward your down payment at closing. In Florida:

• Purpose: Shows commitment; if you back out without contingencies, the seller may keep it.
• Protection: Contingencies (e.g., financing, inspection) allow return if conditions aren't met.
• Disputes: Escrow agent holds until resolved. If no agreement is reached, the parties will typically have to resort to mediation, and then litigation.

Escrow

Escrow refers to a title company or real estate law firm (like Munizzi Law Firm) who is charged with holding funds, preparing documents, working with the lender, and ensuring all title requirements and conditions are satisfied.

• Escrow Account: Where earnest money, taxes, and insurance are held.
  

• Escrow Agent: Manages closing, disburses funds, records deed.
  

• Closing: This is where the parties actually exchange documents and signatures to consummate the obligations of the purchase agreement.

Title Search

A title search is a thorough examination of public records to verify the seller's legal right to sell and uncover encumbrances.

• What It Reveals: Liens, easements, judgments, prior deeds, taxes owed.
• Conducted By: a law firm like ours, and typically occurs about 30 days prior to closing.
• Issues Found: Clouds on title (e.g., unresolved mortgages) must be cleared.

Closing Disclosure

The Closing Disclosure (CD) is a five-page federal form detailing all transaction costs, provided at least three business days before closing.

• Breakdown: Loan terms, fees (origination, appraisal), prorations, cash to close.
• Comparison: Review against Loan Estimate; tolerances limit surprises.
• Florida Specifics: Includes doc stamps, intangible tax on mortgages.
  ‍
  

Deed

The deed is the legal document transferring ownership from seller to buyer.

• Types in Florida: Warranty Deed (guarantees clear title), Special Warranty (limited guarantees), Quitclaim (no warranties, typically reserved for family transfers).
• Execution: Signed by seller, notarized, recorded post-closing.
• Importance: Without recording, title isn't perfected against third parties.

Title Insurance

Title insurance protects against title defects discovered after closing.

• Owner's Policy: Covers buyer for purchase price; one-time premium.
• Lender's Policy: Required by mortgage; separate.
• Florida Rates: Regulated; simultaneous issue discounts.

Seller Disclosures

Under Florida case law (e.g., Johnson v. Davis), sellers must disclose known material defects affecting value or safety.

• Form: Property Seller's Disclosure; covers structure, systems, hazards (sinkholes, floods).
• "As-Is" Contracts: Still require disclosure of known issues; no repair obligation.
• Buyer's Duty: Independent inspections recommended.

Purchase Agreement

The purchase agreement is the binding contract outlining terms.

• Key Elements: Price, contingencies, closing date, inclusions/exclusions.
• Florida FAR/BAR Contract: Standard form with addenda for HOA, financing.
• Amendments: For inspection repairs or extensions.

Home Inspection Report

A professional inspection (not required but essential) details the property's condition.

• Scope: Roof, plumbing, electrical, HVAC, structure.
• Report: Photos, deficiencies; negotiate repairs or credits.
• Specialists: Follow-up for pests (WDO), wind mitigation (insurance savings).

Seller’s Affidavit

Seller's sworn statement at closing affirming no liens, encumbrances, or changes since title search.

• Purpose: Assures buyer/lender of clear title.
• Florida Custom: Includes non-foreign seller affidavit (FIRPTA).
  

At Munizzi Law Firm, we pride ourselves on putting clients first—and that means helping them understand complex terms in easy-to-understand ways. If you are looking for a partner who will be with you every step of the way during your real estate transaction, give us a call today; we’re here to help.

‍