If you buy real estate in Florida remember to do two important things:
1) During your inspection period, run a permit search with the building department of the municipality in which you are buying to determine if there are any open or expired permits.
2) make sure that your contract explicitly places the responsibility of closing out those permits on the seller. If you fail to do these two important things you may end up being responsible for the cost and headache of closing them out after you have purchased the property.
As a safeguard I recommend adding the following language to the contract: “Seller shall be responsible for closing out any open or expired permits prior to Closing at its sole cost and expense.”
In residential transactions the Far Bar “As Is” form is the most popular and commonly used contract throughout the state. (The Florida Realtors Form is also used, but less often, and the same would apply.) Section 21(c)of the Far Bar “As Is” form states that if a buyer’s inspection of the property identifies open or needed building permits, then the seller shall deliver all plans or documents relating to the improvement to the buyer and shall “cooperate” in good faith with buyer’s efforts to obtain estimates of repairs or other work necessary to resolve such permit issues.
Cooperation means the seller should agree to sign any documents, authorizations or consents for the buyer to obtain estimates needed to close out the permit. The provision, however, goes on to state . . . “but in fulfilling such obligation, Seller shall not be required to expend, or become obligated to expend, any money.” By adding the language above to the contract, the risk (and the potential cost) is shifted from the buyer to the seller.
The same risk applies in the context of commercial property transactions and buyers should protect themselves in the same way.
Always consult a Florida real estate attorney before signing any type of contract, especially a real estate contract, when you are unsure of the respective obligations of the parties.
For more information please contact me today.
