Buying and Selling Homes in Florida: Legal Considerations
Buying or selling a home in Florida can be a confusing process, especially if it is your first time. If you are going through the process right now, the following article provides basic information on some key rights and some topics buyers and sellers should be aware of: homestead exemptions and buyers' deposit rights.
Florida Homestead Exemptions
The concept of homestead is as old as the State of Florida. There are only a few states with homestead exemptions, and Florida is considered one of the most generous. There are two types of homestead exemptions available to property owners in Florida: (a) homestead exemption for real property tax purposes and (b) homestead exemption for asset protection purposes. The fact that you have one type of exemption does not necessarily mean that you have the other type of exemption as each exemption has distinct requirements.
Homestead Tax Exemption
Specifically, the homestead exemption for real property tax purposes provides an owner of property with a $25,000.00 reduction from the assessed value of the property, thereby currently reducing the amount of real property taxes by approximately $650.00 each year. Since real property taxes are paid in arrears in Florida (just like interest on your mortgage), this type of homestead exemption is only available if the owner is the permanent resident of residential property as of December 31 of the prior year and owner makes application for the exemption at the property appraiser's office on or before March 1 of the following year. If you are widowed or permanently disabled, you may be entitled to an additional reduction from the assessed value of the property.
Homestead Exemption for Asset Protection
The homestead exemption for asset protection purposes provides the owner of property with a shield from virtually all non-lien creditors. This type of homestead exemption is only available if the property is your primary residence and a court makes a determination that the property is within a municipality or outside of a municipality. If your property is within a municipality, protection is provided for only one half acre of contiguous land. If your property is outside of a municipality, protection is provided for 160 acres of contiguous land.
Know Your Rights Concerning Real Estate Deposits on New Homes
If one is buying a new home, a question that arises is whether or not to place your deposit in escrow or release the funds to the builder. Under Florida law, the buyer has a choice and must decide in writing which option to choose. At first glance the decision would appear simple: just put the money in escrow where it is safe and secure. However, the decision requires carefully weighing factors, such as whether or not the builder is likely to complete the project, as well as the general risk tolerance of the buyer.
If the buyer elects to place the earnest money deposit in escrow, the builder has the right under Florida law to charge the purchaser the builder's cost of borrowing that amount of money, less any interest that the builder is able to obtain on the escrows while the deposits are being held in the bank.
If you would like to know more about your rights and other legal and financial benefits of homeownership in Florida, there are many real estate attorneys who may be able to help.
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