The closing process of a real estate transaction in Florida is arguably the most important step of all. If you are selling or buying a For Sale By Owner (FSBO), then you must understand the closing process in Florida properly to avoid making costly mistakes that either leave you liable or see the transaction collapse entirely.
Note that every state has different laws. In this guide, we’ll make the closing process in Florida easy to understand:
What is Closing?
Closing is the final step in a real estate sale. The process closes the transaction, with the property title passing from seller to buyer, in exchange for the pre-agreed funds.
The closing process in Florida requires both parties to review and sign various legally binding real estate documents, such as:
- Signing the deed.
- Authorizing the creation of an escrow account
- Completing the purchase.
During closing, you may work closely with your realtor, lender and real estate lawyer. If selling FSBO, you may also have no realtor, which is fine so long as you’re working with a real estate lawyer.
Your real estate lawyer will oversee the entire transaction, working to ensure a smooth and problem-free transaction.
The Florida Real Estate Closing Process:
Step 1: Communication
Either you (if selling FSBO) or your realtor will send the executed Purchase and Sale agreement to both your real estate lawyer and the lender.
The attorney will then communicate with the seller’s agent to arrange an appropriate closing date, time and location.
This date is usually pre-determined in the signed contract. However, it can be adjusted for various reasons, such as the lender not responding on time or the other party is unavailable.
Note that closing cannot be completed unless the lender is ready and has provided the necessary information.
Soon after receiving your contract, our attorneys will formally introduce themselves to you, providing you with a clear understanding of your real estate closing and putting any concerns to rest. Our goal is to make this as smooth as possible for you so that closing day feels like a success and not a stress.
Step 2: Title Search
After receiving the real estate contract, our real estate lawyers will order a title search.
A title search is an intensive review of the county courthouse’s records regarding the property you are selling or buying.
Title searches are an essential part of the closing process, as they reveal any unknown liens, outstanding taxes, open loans or complications with the property’s title.
A title search typically takes around a week to complete. Once delivered to us, we will confirm that it’s signed by the correct person.
In most cases, there are no ‘Title Defects’. But when there are, it can prevent the property from being sold.
However, defects can be resolved before closing with the help of a real estate lawyer.
Read Related: Florida Title Company vs a Real Estate Lawyer
Step 3: Title Report
If you’re a buyer, we’ll send the title report (or, ‘Title Commitment’ to your lender stating whether the title is clear or requires action to be resolved.
As a seller, if we notice any issues with the title search we will also advise you on the appropriate action to resolve it, such as paying outstanding debts.
To the lender, the title report is the most essential piece of information to get the loan process going. They don’t want to hand out loans on property that could be actually owned by someone else.
Step 4: Acquire Information
Around this time, your real estate lawyer and the team will be working to obtain all the necessary items from the other party. For example, a seller must provide loan information on a property if they have a mortgage on it. If the property is part of a homeowner’s association, we also need to know of any fees with the transfer of title.
Step 5: Closing Disclosure
A few days before closing, the lender will ask your real estate lawyer to create the ‘Closing Disclosure’.
Known as the ‘CD’, this document details all the expected costs and fees with the real estate transaction and figures such as:
- Purchase price
- Loan amount
- Interest rate
- Monthly mortgage payment
The lender should then send you the CD for review at least three business days before closing day.
Note: Closing counts as one of these days, but not the day you receive the closing disclosure.
Step 6: Circulation of Settlement Statement
After you’ve reviewed the CD, your real estate lawyer will provide you with an ‘ALTA Settlement Statement’.
This document details the figures involved in closing for the buyer and settlement. They should match the costs and figures found in the CD. But it will also guide you so you know how much money you should bring to closing.
This figure is usually not a surprise, but it can differ from the estimate provided by the lender as the lender may be unaware of upfront purchase costs such as homeowner’s insurance and homeowner’s association costs.
If you do need to bring money to closing, your real estate attorney will advise you on whether to bring a personal check or if you should wire the money to the law firm’s escrow account (an account which is maintained by the law firm, but not money held by them).
Step 7: Closing Day
When the closing day has finally arrived, your dream of buying or selling a home has finally arrived. The process typically lasts around 30 minutes to one hour.
During closing day, the two parties will meet at the arranged location to sign the closing documents. You should bring a current driver’s license. If you don’t have one, ask your attorney which form of ID is acceptable.
It can also be wise to bring a personal check, just in case a final figure has been misestimated or adjusted at the last minute by the lender. If any undiscovered information about the title is revealed at this point, then closing will be delayed.
Your attorney will also go over the settlement statement in detail, so you know what you’re buying.
You will then sign all the other loan documents, before receiving the keys. Hooray, you’re a homeowner!
Closing documents that must be signed include:
- Closing Disclosure: This document is required by federal law and lists all the related closing costs, such as loan fees, expenses and real estate taxes.
- Promissory Note: This document details key information such as loan amount, term length, payment schedules and any mortgage payment failure penalties.
- Mortgages: You may have read to use a Deed of Trust, but in Florida, they are not statutory forms or recognized by the state. Buyers purchasing real estate property with a loan should use mortgages.
- Deed: A deed or document that transfers title ownership must be signed.
- Notice of Right to Cancel: This document allows each borrower in the transaction up to three business days to cancel their new mortgage loan. If the borrower is buying a property with a mortgage loan, then they do not have the right to cancel after all closing documents are signed.
Contact a Real Estate Closing Lawyer in Florida
If you’re buying or selling property in Florida, our real estate closing lawyers can help you with the closing process.
We’ll guide you through the process, reviewing legal documents and protecting your rights and interests. We’ll coordinate, prepare and complete documents related to the title, deed, transfer, and loan acquisition.
If you’re purchasing or selling property or land in St Petersburg, Florida or Riverview, Florida, contact us today.
Our St Petersburg & Riverview real estate attorneys have extensive experience that can help you through these tricky moments, reviewing your contract, advising you on the next steps to secure your transaction, and successfully finalizing the purchase of your new home or commercial property.
Contact us today to schedule a free consultation.