Real estate transactions in Florida normally utilize the use of the Florida Realtors As Is Contract which is a form based contract approved by the Florida Bar Association for use by realtors throughout Florida. Although it is the most commonly used contract in Florida, this form can still trigger numerous questions from buyers, sellers, and even real estate professionals who are not familiar with it. As an experienced attorney specializing in real estate law, I have put together some of the top questions clients commonly ask about this important contract along with corresponding answers.
1. What is the Florida Realtors As Is Contract?
The Florida Realtors As Is Contract is a standardized legal contract used in residential real estate transactions throughout Florida. It serves as a comprehensive agreement between a buyer and seller regarding the sale of property in its existing condition. This form and its standard language balance the interests between buyers and sellers and has been well vetted through countless reviews and versions over the last several decades.
2. Is It Mandatory to Use The As Is Contract in Florida?
While the use of the Florida Realtors As Is Contract is common, it is not required. Buyers and sellers involved in a real estate transaction have the ability to use alternative contract forms or draft their own. Several regional contract forms approved by local realtor associations exist, as well as at least one other version of the Florida Contract, but the As Is Contract is the most commonly used form due to its comprehensiveness and acceptance within the industry.
3. What Does “As Is” Mean in the As Is Contract?
The term “As Is” in the contract indicates that the property is being sold in its current condition, with all existing defects and issues. The seller is generally not obligated to make repairs or alterations unless otherwise negotiated and stipulated in the contract.
4. Can Buyers Still Conduct Inspections with an As Is Contract?
Yes, there is a section in the As Is Contract that provides for an inspection period, and the length of that period is determined by the buyer and seller. It is recommended that buyers conduct inspections to identify potential issues with the property and make informed decisions before finalizing the sale.
5. Are Sellers Required to Disclose Defects in The Property?
Sellers are required under Florida law to disclose known material defects or issues that may impact the value or desirability of the property. These disclosures should be made in good faith, and it’s recommended to put them in writing to the buyer’s agent or the buyer directly so there is no question as to whether the issue was properly disclosed. Common defects that sellers may know about, and if so, should communicate to buyers, are roof leaks, malfunctioning equipment such as air conditioning or water heaters, plumbing issues, problems with pool equipment, electrical issues, etc.
6. May Buyers Terminate the Contract After Discovering Issues or For Other Reasons?
Buyers have the right to terminate the contract during the inspection period if they discover issues that are beyond their ability or willingness to address. Buyers do not have to explain why they are cancelling the contract as long as they do so in writing during the inspection period. Buyers also often use this inspection period to try to negotiate repairs, credits, or price reductions with the seller using property related issues as the rationale for doing so.
7. Are Sellers Required to Make Repairs?
Sellers are not obligated to make repairs unless explicitly agreed upon in the contract. Requests for repairs or credits are usually initiated by the buyer during the inspection period, but the seller retains the right to accept, reject, or counter such proposals. The seller should keep in mind that if they reject such proposals or are not seen as being “reasonable” by the buyer during these negotiations, the buyer can always cancel the contract during the course of the inspection period.
8. Does Using the As Is Contract Waive The Seller of All Responsibility?
No, sellers are still legally obligated to disclose known defects to the property and fulfill all other contractual obligations to avoid potential legal liabilities post-closing. This includes maintaining the property through the closing date in the same condition as it was during the inspection period. For instance, if a water heater breaks after the conclusion of the inspection period, the seller is obligated to repair it prior to the closing date.
9. What Happens If a Buyer Discovers Issues Post-Closing?
If a buyer discovers issues after the closing that they can prove were not disclosed or were misrepresented, they may have legal recourse against the seller. Buyers should consult with an attorney to understand their rights and explore potential remedies.
10. After the Inspection Period Expires Can Buyers Still Cancel the Contract For Any Reason?
Upon expiration of the inspection period, buyers can normally only cancel the contract if other contingencies that are provided in the contract or an addendum are not met. For example, if a buyer has a financing contingency, they can cancel the contract if their lender issues a denial letter for a legitimate reason during the financing contingency period. Other types of contingencies could include an appraisal contingency, a cloud on title that is unresolvable by the seller, or a back-up offer contingency. Contingencies vary with each deal so sellers should pay close attention to which options are included in the contract.
11. What Types of Inspections Do Buyers Often Choose?
Buyers often consider a range of inspections, including those for structural integrity, pests, terminates, mold, and other environmental concerns. The specific inspections a buyer chooses depends on the property type, the age of the property, its location, and the risk tolerance of the buyer.
12. Can Sellers Refuse to Fill Out A Sellers Disclosure Form?
Many buyer’s agent’s request that a seller complete a seller’s disclosure form even though it’s not legally required for a seller to do so. Sellers are legally required to disclose known material defects or issues that may affect the property’s value or desirability though. Any failure to disclose legally required information in writing can lead to liability for the seller.
13. What Happens If The Property Appraises for Less Than The Agreed Upon Price?
Some contracts include a financing contingency or a separate appraisal contingency. If the contract has such contingencies included in it and property appraises for less than the agreed-upon price then the buyer may have the ability to cancel the contract. In such a case buyers and sellers often enter into renegotiations regarding the sale price. Some appraisal contingencies may trigger an automatic reduction of the sale price. Sellers should always clearly read the language of each contingency or have an attorney review their contract with them before entering into it.
14. Are Code Violations, Municipal Fines, and Open or Expired Permits Required to Be Closed Out By The Seller?
The As Is Contract requires a lien search to be performed by the settlement agent (title company or law firm) handling the transaction. In many transactions the lien search uncovers some type of code violation, municipal fine, or an open or expired permit that was never closed out by the seller. The As Is Contract does not require that the seller close out such issues unless a fine has caused a lien to be recorded in public records. Therefore, a seller would not be required to close out these types of issues. However many buyer’s agents include language in the Additional Terms section which requires the seller to close out these types of issues prior to closing. Therefore, sellers should read their contract carefully or get legal advice prior to signing a contract.
15. Is It Required to Use an Attorney To Handle a Closing in Florida?
In Florida two types of entities can perform the duties of the settlement agent and handle the closing of a property: a title company or a law firm. Title companies can perform the role of the settlement agent and draft basic closing documents. But only an attorney owned and managed title company or a law firm can offer legal advice and representation, and assist in drafting addendums, escrow agreements, and other legal documents.
Obtaining legal advice and representation from a qualified real estate attorney can significantly benefit both buyers and sellers involved in real estate transactions. An attorney can provide legal insights, ensure contractual compliance, and guard the financial interests of their clients throughout the closing process.
If you have questions about the Florida As Is Contract, the closing process, or wish to learn more about obtaining legal representation please feel free to reach out to our Firm at 1-877-871-8300. We are happy to assist!