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What do I need to know before buying a foreclosed home in Florida

Caveat emptor or buyer beware does not apply to residential real estate purchases in the Sunshine State. Florida law places an affirmative duty on sellers to disclose unobservable material defects that the seller actually knows about.  As a consequence, buyers have a right to rely on the seller’s representations about their home. But the particular circumstances of the transaction dictate whether a representation is material.

Disclosure obligations for foreclosed homes may be different Disclosure obligations imposed on sellers of foreclosed homes are not exactly the same as owner-occupied properties. If the seller that bought a foreclosed home never lived in or repaired it, then that seller will likely not be held to the same standard as a seller who occupied the property. That is not to say that foreclosed properties are riskier or less advantageous. It is only to highlight that buyers of these foreclosed homes should be sure to perform substantial due diligence to understand the condition of the property.
 
Florida case law has established that a seller can only be liable for failure to disclose a material defect of which the seller was actually and not constructively aware. Buyers of foreclosed property should anticipate that the seller is likely to assert their lack of actual knowledge as a defense. In that situation a buyer is smart to perform an independent due diligence survey of the physical property and structure to uncover any material defects prior to closing.
What is the effect of a foreclosure   The process of a foreclosure is essentially the cleansing of the title to real estate. The legal effect of the lawsuit is to foreclose all named and identified interests in the property that are subordinate to the foreclosing party. The important point is that only named and identified parties are foreclosed by the lawsuit.
 
If a party with a proper and valid lien like a roofing company is not named in a foreclosure, then that lien is not foreclosed and may continue against the property. While that lien can potentially be foreclosed later the process becomes complicated by issues like whether the superior mortgage lien was extinguished thereby elevating the junior lien to a position of priority. Naturally, these situations should be avoided before closing which highlights the importance of obtaining and verifying title search reports before closing.
Can I trust a foreclosed home After the real estate market collapse around 2010, the number of foreclosures in Florida dramatically increased. From my experience that was a rapid change. At first buyers with lower contract prices wanted to sue for specific performance to force sellers to sell them the property. During the construction phase the value of the property had often doubled and the sellers wanted to get out of the contract to sell the home for more. In a very short period of time the situation became reversed with sellers wanting to force buyers to close on the property that was rapidly depreciating. Those who purchased often with the intent of quickly reselling or flipping the houses also found themselves subject to foreclosure suits.
 
Following that foreclosure crisis there was a period where the purchase of foreclosed homes dropped. That was attributed to perceptions that lenders had not properly foreclosed the homes. Buyers became concerned about latent defects or a new round of foreclosures. While those problems were largely resolved by our courts, a prudent approach learned from the lessons of the past is for a buyer to hire an experienced  real estate attorney to examine the title and uncover potential defects in the foreclosure. 
Who can help me with buying a foreclosed home Board Certified lawyer are those who have demonstrated their experience and expertise. You can easily search for a Board Certified attorney in real estate, construction, or business litigation on the website of the Florida Bar.

Source: Free Articles from ArticlesFactory.com

ABOUT THE AUTHOR


Written by David Steinfeld

David Steinfeld is one of the few Board Certified business law experts in Florida. He has been licensed for almost 25 years. He is AV-Preeminent rated, ranked as one of the Best Lawyers in America by U.S. News and World Report, and consistently named a Florida Super Lawyer and one of Florida’s Legal Elite. Dave has also received Martindale’s prestigious Judicial Edition Award for high reviews by Judges, its Platinum Client Champion Award and has a 10.0-Superb rating on AVVO as well as a 10.0 rating on Justia, lawyer reviews websites.

Check out business lawyer David Steinfeld online for helpful videos and articles on Florida business law, real estate disputes, and electronic discovery solutions for your business. This article is provided for informational purposes only.



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