Archive for the ‘Real Estate Law’ Category
Joint Property and Probate in Florida
Florida recognizes three types of joint property: tenancy in common, joint with full rights of survivorship, and tenancy by the entirety. Only the last two avoid probate. Here’s the background.
When two people own property as tenants in common, each owns an undivided interest in the whole. If one dies, then probate is required to deal with title to the property of the one who died.
When two people own property as joint tenants with full rights of survivorship, then each still owns an undivided interest in the whole, but when one dies his or her title automatically passes by operation of law to the surviving owner without probate. (There is controversy in Florida now whether creditors of the decedent can reach the joint property even though it does not pass through probate.)
When two people own property as tenants by the entirety, you know they are married because that form of ownership is reserved for married couples. The concept dates back to jolly old England hundreds of years ago when the property owned by husband and wife as tenants by the entirety was considered a “moiety” of title which could only be broken by voluntary act of both spouses. Thus, creditors of just one spouse could not reach tenancy by the entirety property. That rule still applies in Florida, which makes tenancy by the entirety a popular way for married couples here to hold title. In fact, Florida recognizes tenancy by the entirety in both real property like houses and in personal property like bank accounts and investments. And, of course, it avoids probate at each because tenancy by the entirety property passes automatically by operation of law to the surviving spouse.
Let’s apply the above concepts to a typical factual situation. A husband and wife in Florida own investment real estate as tenants by the entirety. One dies, and the property automatically becomes solely owned by the surviving spouse without probate. Should he or she then add the children to the deed as joint owners with full rights of survivorship in order to avoid probate at her death?
Let’s suppose she did and then suppose that one of the children later has a nasty divorce proceeding and another child later has problems with credit card debt. Can the children’s spouse and creditors reach the children’s interest in the joint property? Yes, they can. This is a huge risk for anyone who adds someone else as a joint owner to their property for the purpose of avoiding probate. While it might avoid probate at their death, it places the property at risk of being reached by the new joint owners’ present and future spouses and creditors.
Conclusion: It is simple to put property into joint names in Florida, but the effect is not so simple. Probate might be avoided, but at the risk of loss of the property before then to creditors of the new joint owners. There are other ways to deal with this problem. Ask your Florida lawyer.
Take My Name Off the Deed, Please
So, how do you take your name off the deed? How do you take anyone’s name off the deed? It depends on where the real estate is located. In Florida, and in most states, you cannot literally take a name off the deed.
Here’s the reason. Many people think houses are like cars. Cars have title certificates, so houses must, too. But they don’t. At least not in Florida.
Vehicle title registration systems are mostly a 20th century thing. Cars are, too. Land ownership, on the other hand, is ancient. Florida land ownership laws are based on the common law of England so there are no title certificates. Instead, who owns land and houses on land is determined by searching the public records where deeds are recorded. The last deed recorded usually says who the current owner is.
Of course, that’s why you need title searches and title insurance: to cover those times when the last deed does not name the current owner.
So, how do you get someone’s name off the title to real estate in Florida? It depends. Sometimes it takes recording another deed. Sometimes it takes recording a death certificate. It all depends on the facts and the state of the title. Which is what lawyers and title companies help you do.
Jim Martin 3/10/09
FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.
How Many Kinds of Deeds Are There in Florida?
When you buy real estate in Florida and when you sell real estate in Florida, it’s important to think about the kind of deed to convey real property. There are many kinds of deeds in Florida. Here are a few of them:
If you are the buyer, you want the seller to sign a statutory warranty deed because it means the seller gives various warranties to you, such as a warranty of title. If the title fails, then you could sue the seller for breach of warranty. This is the type of deed that is usually prepared by lawyers and title insurance agents for closings in Florida. It is the type of deed specified in the form contracts issued by the Florida Association of Realtors and The Florida Bar. But, there is no law that says it must be used.
If you are the seller, you want to sign a fee simple deed because it contains no warranties but it still purports to convey fee simple title. If the contract or buyer require a warranty deed instead of a fee simple deed, then the seller can try to negotiate to sign a special warranty deed which gives the warranties only for the period of time that the seller owned the property.
If you are a trustee, personal representative or guardian, then you want to sign a special type of deed for that capacity, which is similar to a fee simple deed and gives no warranties because it would obligate the trust, estate or guardianship beyond the term of your office.
If you are not sure whether you really own the property, then you want to sign a quit claim deed. Nonlawyers sometimes mistakenly call this a quick claim deed but the correct name is quit claim deed. Doing this means you quit claim your interest to the grantee, meaning that you only convey to the grantee whatever interest you have in the property, and if you have no interest in the property then you are conveying nothing.
Of course, it’s very important to have your own attorney review any deed before you sign it. And it’s imperative that a title search and title insurance be obtained from a licensed title insurance company before you sign a deed, too.
Jim Martin 2/23/10
FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.
Buying a Florida Condo? Are Your Neighbors Paying Their Fees?
An article in today’s St. Petersburg Times points out a potential problem when buying a condominium in Florida. The headline says it all: “Condo owners must cover fees for deadbeats.” The gist of the article is that when a Florida condo owner stops paying the mortgage, the condo association fees usually go unpaid, too. That means that the other condo owners have to make up the difference so that the condo association has enough money to keep the pool, recreation area, parking lot, and other common elements maintained and in repair.
How can this happen? It’s because legally the the mortgage holder has a lien (pronounced “lean”, as in “Please don’t lean on me.” ) on the condo unit. The lender’s lien is usually in first place. This makes it hard for the condo association to assert its right to collect the monthly association fee by putting its own lien on the condo.
The continuing problems in the economy further exacerbate the problem. Many lenders are filing foreclosure lawsuits and getting foreclosure judgments but not actually holding foreclosure sales. This means that titles to the condo units remain in the condo owners who are not paying the condo associations’ fees. Sometimes the condo owners remain living in the condos during the foreclosure process. This can go on for years.
And sometimes condo owners file bankruptcy, which further delays the day when a bona fide owner takes over the condo and begins paying association fees.
All in all, the warning is clear: Before buying a condo in Florida, you need to know your neighbors. Are they paying their condo association fees? Ask the condo association for financial statements and reports. Check with the County Property Appraiser and the County Clerk of Court to find out if any of the units in the condo are in foreclosure. Hire a lawyer to guide the due diligence investigation.
If a buyer fails to include these steps in the due diligence investigation before signing a contract to purchase a condo, the buyer could end up being one of the good guys who makes up the condo fees not paid by the financially-unfortunate guys.
Happy Valentine’s Day.
Jim Martin 2/14/10
FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.
Renting Florida Homestead Could Be Costly to Owner
Times are tough for Florida homeowners. But renting out your home and living elsewhere might make it even tougher. This is because you might be abandoning your homestead protections when you do this.
Florida law grants Florida homeowners several protections with regard to their homesteads. First is the homestead exemption on the annual real estate taxes. Second is the Save Our Homes Cap on the value that is subject to the annual taxes. Third is the exemption from forced sale of the homes by general creditors.
All of these protections require that homes be the homesteads of the owners. Homestead can be complicated to determine, but it comes down to being the place where you intend to permanently reside; i.e., your domicile. Various facts show your intent. What address is on your driver license, where your bills are sent, what address is on your tax return, where you physically live, etc.
If you rent the home out to someone else and no longer live there yourself, you have created evidence of abandonment of homestead even if you still own the home. This gives the state a reason to take away the homestead tax exemption and the Save Our Homes Cap, resulting in substantially higher annual real estate taxes. It also gives general creditors a reason to claim the right to enforce judgments against the home since it is no longer protected as homestead.
So, before renting out Florida homestead, consider whether doing so will result in possible loss of the homestead exemption. (Of course, the same consideration applies to moving out of the Florida homestead without renting it.)
Jim Martin 12/31/09
FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.
Mortgage Foreclosure : The Process in Florida
This blog entry summarizes the process for mortgage foreclosures in Florida. It does not give tips or tricks for plaintiffs or defendants. I represent both lenders and borrowers, and I don’t want to help the other side in a pending or future case. But I think it is always beneficial for all parties to know the process, so this article is intended as a general statement of the process to foreclose a mortgage in Florida.
Underlying Obligation. Every mortgage has an underlying obligation. It is usually a promissory note, but it can be a loan agreement, a guaranty, a property settlement agreement, a contract or any other legal obligation. If the legal obligation is a promissory note, the one who owes the money is called the “maker” and the one to whom the money is owed is called the “payee”. If the note is assigned, then the one who holds the note is the “holder”. The underlying obligation is important when foreclosing a mortgage because without an underlying obligation, there can be no mortgage.
Mortgage. The mortgage is a writing by which the underlying obligation’s performance or payment is secured by a lien on real estate. Technically, a mortgage is given by the property owner to the lender, but sometimes we hear about a bank giving a customer a mortgage. What is really meant is that the bank is giving the customer a mortgage loan. It’s the customer who gives the bank the mortgage, in order to secure payment of the promissory note that evidences the loan.
Real Estate. The real estate can be a house, a home, a homestead, a condominium (condo), an office, a store, a building, a lot, vacant land, a farm, a ranch, etc. Real estate and real property mean the same thing. Real property is land, dirt, ground, earth and what is attached to it: buildings, trees, fences, flag poles, swimming pools, streets, driveways, etc.
Mortgagor and Mortgagee; Borrower and Lender; Defendant and Plaintiff. The owner of the real estate is called the “mortgagor”, and the one to whom the mortgage is given is called the “mortgagee”. So, the borrower is the mortgagor, and the lender is the mortgagee. When the mortgage is foreclosed, the lender is the plaintiff, and the landowner is the defendant.
Default. To foreclose a mortgage in Florida, there must be a default of the underlying obligation or a term in the mortgage. Notes and mortgages usually define what constitutes a default. They usually state that failing to pay a monthly payment on a promissory note when it is due constitutes a default. They usually state that such a default gives the lender the right to declare the entire principal balance of the note to be due and payable right then. They sometimes include a grace period to bring the note current and avoid acceleration of the entire balance.
Demand Letter. The lender usually sends the borrower a demand letter before foreclosing on the mortgage. It usually states a date by which payment must be made to avoid foreclosure. A demand letter might not be required, but it is often sent to avoid litigation and to resolve the dispute out of court. It is always best to engage a lawyer to send a demand letter and to reply to a demand letter. Let me go back and say this, too: it is always best for the lender to have a lawyer prepare the note and mortgage before making the loan, and it is always best for a borrower to have a lawyer review the note and mortgage before signing it.
Complaint; Lawsuit; Pleadings. How do you foreclose a mortgage in Florida? By filing a complaint with the clerk of court. A complaint is the writing that starts a lawsuit. It requires a hefty filing fee. We Florida lawyers generally refer to any papers we file with the court as “pleadings”, but that’s wrong because we file motions all the time and they are not technically pleadings. That’s a reason it’s always best to engage a lawyer to represent a plaintiff or defendant in court: the wording on the paper counts. We are bound by what we say. We may waive rights if we do not say the right thing or do not say it in time.
Summons; Service. When the complaint to foreclose the mortgage is filed, the clerk issues a summons. The summons commands all the sheriffs in Florida to serve the complaint on the defendant (borrower). It also commands the defendant to respond to the complaint within 20 days. The summons and complaint are served on the defendant by a sheriff or a process server. Instead of serving the defendant, they can also serve someone else in the defendant’s place of abode. The rules are technical, so once again it is best to consult a lawyer. Especially if your 17 year old son says someone came by and dropped off papers but he doesn’t remember where he put them. You only have 20 days to find them, hire a lawyer, and file with the court.
Answer. Generally the defendant must file an answer within 20 days after service of the summons. Sometimes a motion can be filed that tolls the time to file the answer. Sometimes a counterclaim can be filed, as well. These are technical writings that only a lawyer should prepare. Failure to raise defenses and claims at this time may result in loss of the defenses and claims.
Default. If an answer or proper motion is not filed within the required period (usually 20 days), then a default may be entered that will result in an immediate judgment being entered in favor of the lender and against the borrower without holding a hearing or trial. This is bad, if you are the borrower, but good if you are the lender. It can be very difficult to set aside a default judgment so this is something for all borrowers to avoid.
Discovery. Parties in lawsuits are entitled to seek discovery from other parties by asking them questions in front of a court reporter (oral depositions), sending them written questions (interrogatories), asking for copies of documents (document production), etc. This can be quite time consuming and expensive, but it is standard practice in most lawsuits to engage in discovery in order to avoid surprises at trial.
Summary Judgment. The lender will often ask the court to enter a foreclosure judgment without holding a trial. A summary judgment is often granted in foreclosure cases when there is no material issue of fact or law. Again, this is very technical, is the domain of lawyers, and varies from case to case.
Mediation. Courts generally require mediation before trial. Sometimes cases settle as a result of mediation, avoding the need for a trial.
Trial. Unless a default judgment or summary judgment was entered or the case settles, the case will eventually go to trial. At the trial, each side will present evidence needed to prove its side of the case, after which a decision will be made as to whether the plaintiff/lender wins or the defendant/borrower wins.
Judgment; Foreclosure Sale. The court’s decision is set forth in a writing called a “judgment”. In foreclosure cases, the judgment directs the clerk of court to sell the real estate on a specific date, time and place. The sale proceeds are applied to what the defendant owes the plaintiff. Generally, the bidding is open to anyone who wants to buy the property. The plaintiff is allowed to bid on the real estate at the sale and, instead of paying cash, may apply up to the judgment amount toward the bid amount.
Special Rules. There are so many foreclosures in Florida now that some courts have adopted special rules for mortgage foreclosures. For example, in Pinellas County, institutional lenders must follow specific rules and file specific forms to foreclose mortgages. The goal is to anticipate and avoid common legal and evidentiary problems before they reach the judge on the day of trial, thus saving precious courtroom time for cases that truly have issues of fact to be tried by the court.
Conclusion. Of course, this is just the tip of the Florida mortgage foreclosure iceberg. Florida lawyers are creative, so we try to come up with ways to help the lender enforce its remedies for a mortgage default and ways to help the borrower defend against mortgage foreclosure. Today there is much economic uncertainty for both lenders and borrowers. Courts will be the place of final resolution for most of the mortgage crisis in Florida and America. Florida lawyers will be there to foreclose mortgage in Florida for the lender and defend the foreclosure for the property owner.
Jim Martin 4/2/09
FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.