I’m Eric Lanigan with Lanigan and Lanigan attorneys in Winter Park, Florida.
General Rules for Buying Real Estate in Florida
I want to talk today about the general practice of buying real estate in Florida. Because we get many foreign investors and they know nothing about things the locals let’s say take for granted. Foreign Florida real estate investors beware of the pitfalls waiting for you in this difficult to navigate buyers market.
You may watch the video, “Foreign Florida Real Estate Investors Beware of Pitfalls,” on the Lanigan and Lanigan YouTube channel.
So let’s go over just a couple of those rudimentary things you need to consider if you’re a foreign investor coming into the United States. And specifically who are the people, who are the players involved in looking for real estate and owning real estate in Central Florida.
No. 1: The Real Estate Agent
Get a Buyer’s Agent
First of all your real estate agent. Every buyer should have what we now call a buyer’s agent. There’s the seller’s agent that’s the real estate company that has the property listed for sale.
You can go directly to those people. But I always recommend to people that you contact an agent who’s going to help you find the kind of property in the locale that you’re looking for and they’re looking specifically for you. They are not just trying to sell one particular piece of property on which they have a listing.
And the good news is that although the buyer’s agent is representing you and looking for what you want to find, ultimately they are paid by the seller because the seller pays the real estate commission and it’s divided up between the seller’s agent and the buyer’s agent.
No. 2 The Real Estate Attorney
You Need a Lawyer–Especially in Florida Real Estate Deals
The second person in the equation is the lawyer. I think lawyer’s are very important in real estate transactions in Florida. And although I’ve lived here all my life, I’ve got to tell you Florida has a history of a lot of shady real estate activity that goes back to the 1920s when they used to sell swampland to unsuspecting Northerners who would come down here and think they bought a lot in a resort community and find out that it was under water and there wasn’t even a road to get there.
There’s a lot of stories about that type of activity. There’s also a history of booms and busts in real estate where the real estate market goes from red hot to ice cold. And it can be red hot in an area and ice cold a mile away.
No. 3 Know the Real Estate Area You Buy In
And if you’re not familiar with all of that it can become a real problem.
For instance I’ve lived in Central Florida my whole life. I grew up here, went to school here, have lived here, I know the area. I what areas that are consistent with what it is you’re intending to do.
Who Are You Renting To?
Are you buying a property for rental? What kind of rental? Do you want to rent to retirees? Do you want to rent to college students, to young families.
Big difference in those types of markets and big difference as to the the area that you want to be in depending upon who you’re looking for.
College Students, Families, Retirees? Know Your Neighborhoods
If you buy a duplex that’s a mile away from Central Florida, like it or not, you’re going to be renting to college students. You’re not going to be renting to the retirees because they are not going to live in that neighborhood.
So all of that becomes critical and you can literally have two houses a mile away from each other, and yet the marketplace, the demographics of who you’re going to rent to are night and day.
Where Do YOU Want to Live Eventually?
And the difference in where you ultimately may want to live in a college neighborhood vs. a neighborhood with families or retirees big difference but they can be as close to a mile away from each other.
No. 4: The Title Insurance Company
Next player in the game would be the title insurance company. Title insurance is something we have hear in the U.S. which is a company which like it’s name implies insures the title to your property.
They do an inspection of the public records to find out whether or not the title is what we call “clean” without any claims or liens. And then they issue a title insurance policy to insure against unknown title defects.
Unknown Title Defects or Liens
And it’s a critical word, “unknown title defects or liens.” Every property will have some type of lien on it whether it’s an easement for the power company to come through to lay power lines or repair power lines.
Or an easement for a neighbor to drive over the property to get to their property. Mortgages. Judgements that have been entered against the property owner that lives there. All of those things can effect the title to the property. So if you get handed a title insurance policy or a title insurance commitment, it doesn’t mean the property is free and clear of liens and encumbrances.
It means that here they are and we’ll insure the property but for these things.
Well how significant are those things? Which gets us then back to the lawyer to address those issues and to be able to tell you well this lien is very common it’s a power company lien it’s just so they can come over your property to repair power lines.
Or is it something that is really is going to detrimentally impact the value of your property or even the quality of your title. So that becomes critical and you’re not just going to find that out just by reading through the title insurance policy.
Foreign Nationals Beware of One Stop Shopping
One thing I always try to tell people, especially foreign nationals coming into the United States is you’ve got to be very very careful of what I refer to as the one stop shopping.
The situation where everything from your visa, to the property that you’re going to buy, to the real estate agent that you’re going to use, to the title company that this one company is telling you that they’re going to provide all these things for you.
And I think it’s a huge mistake and I don’t mean to pick on visa service companies, people who get your visas for you, get the visa to come into the country.
Pick Your Own Realtor, Lawyer, Title Company
But I’ve seen I’ve had several cases where it’s just been a disaster and I found out that they were working with this visa service. And the visa service said go to this realtor and they’re all sort of linked together.
It sounds very convenient but I fervently believe that it is not in your best interest. You need all of these professionals to be independent of each other. Their allegiance and their friendships don’t need to be between each other they each need to be to you.
Beware the Friendly, Helpful Seller with a Lawyer for You
And this is especially true to be independent of the seller. So if you look at a property and the seller says well I know a lawyer and I know a this I know a that, step back. It’s not going to, it might be a little more inconvenient, it’s not going to be as easy but independently get those people to represent you in these different areas.
Real estate agent, lawyer, title insurance company, find them yourself, it will all come together it will be much easier than you think. But avoid at all cost the one stop shopping location.
Again, I’m Eric Lanigan, Lanigan and Lanigan attorneys, in Winter Park, Florida.