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FLORIDA

Residential & Commercial

BUYING/SELLING REAL ESTATE

RESIDENTIAL PURCHASE/SALE TRANSACTIONS.
Purchasing a residential property is one of the most expensive purchases a person will make. It is very important that this purchase or sale transaction be handled with diligence and care. Meeting deadlines, for example, to move the transaction to close is imperative. Over the years, our law firm has represented many buyers and sellers of residential properties.

COMMERCIAL PURCHASE/SALE TRANSACTIONS.

A sale of commercial real estate is often very different from the sale or purchase of a residential property – even if the residential property is an investment property for the owner. When it comes to commercial properties, many other issues arise. Typically, the buy/sale of the commercial property also involves the sale of the business that is operating at the property. So there is not just a real estate transaction involved, but a purchase/sale of a business as well. If there is a loan involved in the transaction, additional considerations come about related to both the real estate and the business.

Existing Tenancies. If there are operating tenants at the property, due diligence is essential. Cash flows can be assessed by trying to discover the status of each tenancy. There are tools available that can better determine matters like how much time is remaining on each lease, are the tenants current in their rent, and how much in security deposits are being held or could be due.

Cell Tower Issues. Cellular tower leasing has been a considerable revenue opportunity for landlords. But there are several possible ways to offer roof-top space to cellular providers or intermediaries. It is possible to enter into short-term leasing of the rooftop space, or long-term, and even the granting of easements and selling the space. When the real estate property is being sold and there are an existing cell tower access rights granted to a cellular provider, then additional concerns in the sale transaction should be considered.

Property Liens or Claims. Another important aspect of a purchase/sale of commercial real estate is investigating the effect any liens or other claims on the real estate or business that owns or operates the property. Liens could arise from many sources. Such liens and claims could affect the marketability of the real estate title or cause other significant issues.

FOR INVESTMENT PURPOSES. Purchasing or selling real estate for investment purposes has great potential. But it is different than owning the real estate as a residence. For investment, it is advisable to own the real estate in a legal entity other than individually. There are legal reasons for using a company to own the real estate. There can also be estate planning and asset protection reasons as well.

As a Residence. When purchasing real estate as a primary residence for the owner, there are some different practical

Our Steps in the Representation: Our law firm representation in real estate transactions starts with the buy/sell agreement. We negotiate the agreement for our clients, adding terms that protect the specific needs and interests of our clients. The next phase in the transaction can involve assisting with lending transactions, inspections, and due diligence. For commercial properties, it can be imperative to conduct a thorough review of the property and what is on it. For example, if the property was once a gas station, there may be underground tanks to contend with and make sure environmental laws are complied with. For a residence, an inspection to make sure prior repairs and construction work were done pursuant to applicable building code with permits closed is very important. The title work to ensure the marketable title is conveyed is another imperative aspect of an impending closing transaction.

OTHER LINKS TO THIS PAGE – 1031 EXCHANGES

1031 Exchanges. A 1031 Exchange, when structured correctly, can defer any capital gains taxes otherwise due on a transaction involving the sale of real estate. There are some requirements for a transaction to meet the legal standards to obtain the defer rights. One such requirement is that the seller acquires a like-kind new property.

Using a 1031 like-kind exchange offers those entitled to take advantage of this type of transaction a great opportunity to sell income or investment property and replace it with a like-kind property and not have to pay the gains on the sale. The name 1031 exchange comes from the code section of the Internal Revenue Code Section 1031 that addresses these types of transactions.

The essential rules for a 1031 Exchange include that the property being sold, the relinquished property, must qualify as a property held for investment or used in a trade or business. The newly acquired property, the replacement property, has to be purchased by the same person or entity that sold the relinquished property. The replacement property must be of like-kind to the relinquished property. That means they need to be similar types of properties. They need not be identical though – meaning a 5 story commercial building need not be replaced with only a 5 story office building. The replacement property needs to be identified within 45 days and within 180 days the purchase of the replacement property must be closed.

Our law firm has represented clients in their 1031 Exchange transactions, working closely with accountants and qualified intermediaries to make sure the 1031 Exchange rules are satisfied and maximum benefits received by our clients.

TENANT IN COMMON AGREEMENT WITH ASSET MANAGEMENT. This is a unique type of real estate ownership that enables multiple people or businesses to own one real estate property. Often, a TIC is used by an institutional investor seeking to acquire a significant property and have multiple owners collectively owning it under one deed, with an asset manager running the property.

Ask us for more information about using a Tenant in Common ownership structure to own and operate real estate.

Other Real Estate Purchase Matters. Landlords, Investors & Property Managers can use real estate ventures to make money. There are a variety of transactions that can be set up to enable a buyer to acquire residential and commercial properties. Our clients often enter into these transactions to enable another to purchase real estate.

STANDARD LOAN AGREEMENT. In a private loan agreement, money is lent to a buyer to purchase real estate in exchange for a promissory note and a mortgage. The mortgage is a lien on the real estate. Short term loans, such as those that enable acquisition and construction of a real estate project have very different terms than a long-term fixed real estate loan transaction. The latter is more traditional of standard commercial lending institutions such as banks. But our clients also offer to finance to buyers. We help with the transaction documents to enable the closing of the loan and purchase.

Unfortunately, at times, borrowers are unable to or unwilling to satisfy the payments due under the loan agreement. For the lender to recover, the lender has to commence a foreclosure action on the mortgage. The lender can also sue the borrower for the unpaid loan proceeds, but it is the mortgage foreclosure that provides the remedy of foreclosing on the property and its sale at the auction.

AGREEMENT FOR DEED. This is an agreement that enables a buyer to acquire real estate through an agreement that calls for the buyer to make payments and upon payment of an agreed upon sum, the seller will then sign over the deed to the real estate to the buyer. It is similar to an installment sales contract whereby title is not passed to the buyer until the payment of all sums due is paid.

Under Florida law, if a buyer breaches the agreement for deed, the remedy available to the seller is a foreclosure action. That is because Florida law vies agreements for deed as mortgages on the real estate.

LAND TRUSTS. A land trust is generally a revocable trust established for the purchase and holding of real estate. The land trust is ‘setup’ or established by a settlor. The settlor signs an agreement, call the land trust and designates who will be in control of the trust such as making decisions for the trusts’ activities. That role is called the trustee. The beneficiary is who will receive the benefits or disbursements of the trust. There is generally an original settlor that establishes the trust, but there can be more than one trustee as well as successor trustees who serve on behalf of the trust in the event a prior trustee is unable to. And there can be different types of beneficiaries and what they get from the trust can vary depending on several factors written into the trust agreement.

To acquire the property that is titled into a land trust, a loan may be obtained. In the event the loan is not paid back in accordance with the loan terms, the lender will start a foreclosure action to recover what is owed or the property. Because of some unique aspects of a land trust, the foreclosure process has differences from a traditional foreclosure.

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