Congratulations! After months of searching for the right property, you’ve found one in sunny South Florida. When you buy a property, there are two important financial transactions that take place: the closing and the escrow.
Galaxy Title & Escrow offers expert Florida real estate services such as closing and escrow, all handled by licensed professionals.
What is a Closing?
Closing is a process by which the ownership of a property is transferred from one party to another. It usually takes place in the presence of a notary public, and it involves the signing of various legal documents. The buyer will need to pay for things like title insurance, attorney fees, and taxes, and the seller will typically receive their proceeds from the sale minus any outstanding debts on the property. By using a closing and escrow service, both parties can be assured that all of these costs are taken care of and that the transfer goes smoothly.
What are Closing Costs?
Closing costs are the fees that are paid when a property is transferred from one owner to another. These costs can include attorney fees, title insurance, taxes, and other charges. In order to ensure that all of these costs are paid and that the transfer goes smoothly, many people choose to use a closing and escrow service.
How Much Are Closing Costs in Florida?
Closing costs in Florida are, on average, $4,606 for a home priced at $255,006. Those closing costs make up 1.81 percent of the home’s price tag. Florida has the sixth most expensive closing costs in the country.
What is an Escrow?
An escrow is a financial arrangement in which a third party holds money or property until the conditions of an agreement between two parties have been met. For example, in a real estate transaction, the buyer might put down 10% of the purchase price as a deposit, with the remaining 90% being held in escrow by the seller’s agent. This ensures that the buyer will not lose their deposit if the seller backs out of the deal, and it also protects the seller from paying out of pocket if the buyer fails to follow through.
What is an Escrow Account?
An escrow account is a financial account held by a third party (usually a bank) that is used to hold funds from one or more parties until all conditions of an agreement have been met. This type of account is commonly used in real estate transactions, where the funds from the sale of a property are deposited into the escrow account until all tasks associated with the sale (such as the transfer of the property’s title and the payment of closing costs) have been completed.
When Does Escrow Close?
Escrow usually closes when all conditions of the escrow agreement have been met. This generally happens when the property has been transferred, the loan has been funded, and all necessary inspections have been completed. However, there are some cases where the escrow company may release the funds or documents prior to all conditions being met.
Why Use an Escrow?
There are a number of reasons why people use escrow services:
- To ensure that the sale or purchase of a property goes smoothly and in accordance with the agreement
- To provide a neutral third party who can mediate in case of disputes
- To protect the interests of both buyers and sellers
- To provide a safe and secure place to store money or documents
- To protect the interests of both buyers and sellers
- In the event of a dispute, an escrow holder can serve as an impartial third party who can make decisions about how to distribute the funds
What Happens in the Event of a Dispute?
In the event of a dispute, the escrow holder will review the situation and make a determination about how to distribute the funds.
What is an Escrow Agreement?
The escrow agreement is a document that outlines the terms and conditions of the escrow. This agreement is made between the buyer and seller, and it includes information such as:
- The type of property being purchased
- The purchase price
- Who will pay for which closing costs
- The date of closing
- What happens if the escrow doesn’t close
- How disputes will be resolved
Why are Closed Escrow Services and Accounts Necessary?
Closed escrow services and accounts are necessary in order to ensure that all parties involved in a real estate transaction are protected. By using an escrow account, buyers can be assured that their money will only be released to the seller once all conditions of the sale have been met.
What are Some of the Closing Costs that Buyers and Sellers Typically Encounter in a Real Estate Transaction?
Some of the most common closing costs that buyers and sellers encounter in a real estate transaction include:
- Document preparation fees
- Title search fees
- Appraisal fees
- Credit report fees
- Loan origination fees
- Loan application fees
- Closing agent’s fee
- Transfer taxes
What are Some of the Benefits of Using a Closed Escrow Service?
Some of the benefits of using a closed escrow service include:
- Protection of buyer’s money
- Protection of seller’s identity
- Reduced risk of fraud
- Elimination of the need for a middleman
- Streamlined process
What are IRS Residency Certificates?
IRS Residency Certificates can be described as documents that verify an individual’s U.S. tax residency status. The Certificate confirms that you are in compliance with the U.S. tax laws and are subject to U.S. taxation on your worldwide income, no matter where you reside.
What is a 1099-INT?
A 1099-INT is an Internal Revenue Service (IRS) form that reports interest payments made to a taxpayer during the previous year. This form is usually sent to the taxpayer by the financial institution or company which paid them the interest income. The 1099-INT shows the total amount of interest payments received during the year, as well as the date, payer, and amount of each payment.
What are Acknowledgments and Affidavits?
Acknowledgments and affidavits are two of the most common forms used in closing a real estate transaction. In an acknowledgment, the parties to a contract or deed certify that they have received and read the document in question. Affidavits are sworn statements made by individuals and are often used to confirm certain facts or details about a particular situation.
What is a DFS Form (Florida Insurance Premium Disclosure)?
A DFS Form is used to provide the Florida Office of Insurance Regulation (OIR) with premium information on property and casualty insurance policies. The form is also used to report cancellations, non-renewals, or changes to a policy.
What is Warranty Deed/Assignment of Proprietary Lease (Co-op)?
The warranty deed/assignment of proprietary lease (co-op) is the most common form of conveyance for a co-operative apartment. It is a deed in which the grantor (seller) warrants good title to the property and agrees to defend the title against any legal challenge. The warranty deed/assignment of proprietary lease (co-op) also obligates the grantor to indemnify the grantee (buyer) for any loss suffered as a result of any breach of this warranty. In addition, the deed usually contains various other provisions that are specific to cooperative apartments.
For example, it may provide that the buyer will be given membership in the co-operative corporation or that the seller will remain liable for maintenance fees after the sale.
It should be noted that, in the case of co-op apartments, the deed is usually assigned to the co-operative corporation and not to the individual buyer.
A co-operative apartment is a form of housing in which the residents own shares in the corporation that owns the building in which they live. In order to purchase a co-op apartment, you must become a member of the co-operative corporation. The shares represent your ownership interest in the co-operative.
When you purchase a co-operative apartment, you are actually purchasing an “assignment of the proprietary lease.” This means that you are not buying the physical property, but rather you are acquiring the right to live in the property pursuant to a lease from the co-operative corporation.
What is a Bill of Sale?
The Bill of Sale is a legal document that transfers the ownership of personal property from one individual to another. It is a type of contract, and as such, it must be entered into knowingly, willingly, and voluntarily by both parties.
What is a Disbursement Authorization?
The disbursement authorization can be described as a document that allows the escrow holder to disburse funds from the escrow account. The disbursement authorization is given to the escrow holder by the buyer and lists all of the parties that are authorized to receive funds from the escrow account.
Contact Galaxy Title & Escrow Today to Learn More
Contact Galaxy Title & Escrow today to gain more understanding of FIRPTA and how it may affect your real estate investment. Our team of professionals has extensive experience handling Florida real estate purchases and sales that may involve FIRPTA. We recognize this can add another confusing layer to the buying and selling process, and we’re here to help!
Do you have more questions regarding Florida closing and escrow? Our team of professionals is here to help. We have a proven track record of expert execution within all aspects of Florida Real Estate services. Regardless of whether you are buying or selling we’ll make sure your closing procedures are efficient and timely and all escrow disbursements are properly executed. Contact us today!
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Mitchell has been a licensed attorney since 2014 and has practiced in both the transactional and litigation fields of law. His experience allows him to approach every transaction with a depth of knowledge and practical experience most attorneys do not possess. Mitchell prides himself on providing top notch service to his clients.