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Selling Your Home
31 JUL 2006 |
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Seller Beware: Tips for Selling Your Condo in a Sluggish Market |
By: David Hannan, Real Estate Attorney
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We’ve all heard the
statement “buyer beware” when purchasing property. However, the
mantra really should be “seller beware” when South Florida
condominium owners begin to think of putting their property on the
market.
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According to The Fund’s Real Estate Index, closing volume for resale
condominiums in Broward County remains well below its peak from
April 2005. Therefore, it is imperative that sellers go the extra
mile to make their property attractive to buyers, and equally
important, take precautions to reduce the margin for error in a real
estate transaction. In a cooling market, every detail becomes more
critical.
There are several traps and simple mistakes that sellers make which
often lead to delays in closing or last minute contract
cancellations. Follow these four steps to avoid seller’s remorse:
1. It may seem obvious, but the first step when selling your condo
is to “be prepared to sell your condo.”
Gather all the necessary
documents and information that the buyer’s real estate attorney will
request of you: a copy of your title insurance policy, contact
information for the condo’s management office or the association’s
management company, and current open mortgage information
(remember-a line of credit secured by your condo is a mortgage).
Just like you wouldn’t go to a job interview without your resume,
don’t try to sell your home without first securing the necessary
documentation.
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2. Step two: Be aware of governing law.
For example, Florida statute 718.503 Section 2 allows a buyer to
cancel the contract within three business days of being provided the
current copy of the Declaration of Condominium, Articles of
Incorporation, Bylaws and Rules of the Association, a copy of the
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year-end financial information and the Frequently Asked Questions
and Answer Document.. Most people think the documents they keep in
their kitchen drawer from when they purchased the condo are all they
need to give to their buyer. However, if your buyer requests these
items in writing, he/she can legally cancel the contract within
three business days of your providing them - this can be right up to
the day of closing. In fact, if the items are delivered at the
closing, the buyer can delay the closing for three days and still
have the option to cancel.
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3. Step three: Avoid the “Special Assessment” trap.
Talk to your condo association to determine if they plan to make any
special assessments to improve or repair the common property, which
may include renovations or upgrades such as redoing the landscaping
or renovating the exterior balconies. Your contract will
contain clauses concerning pending or levied (approved) condominium
special assessments.
Frequently, the contract requires the seller to make a
representation about whether the seller knows of any pending special
assessments. If there are pending or approved special assessments,
your contract should include these details and identify who is
responsible for paying for them.
Do not rely on the “Standard
Clauses”. You as the seller may opt to pay for the assessments,
split the costs or require that they buyer pay the assessments since
he/she will reap the benefits. Including these details in the
contract ensures that there won’t be any surprises.
4. Step four is a guideline that is particularly important in
Florida’s tropical environment:
Broward County is currently at war
with Formosan termites, a more aggressive version of the
Subterranean termite, which can establish secondary nests above
ground. Ask your condominium manager or board members if they have
any knowledge of an infestation of these termites in your building.
You don’t want your buyer to learn of an infestation at his condo
approval interview. Sellers have a duty to disclose any facts that
would materially affect the value of the property, and Formosan
termite infestation is something you do not want buyers to discover
on their own. A particular condominium complex in Broward County
will not approve buyers unless they sign an acknowledgement that
they have been informed of the termite infestation. In one case, a
buyer was not informed and refused to sign so he was not approved.
The seller was compelled to give the buyer back his deposit.
These four steps can save you a lot of time, money and stress if
done well in advance of placing your condo on the market. Most
importantly, work with a qualified real estate attorney. He or she
can help you shape a contract that incorporates your specific needs,
will ensure that you do not violate any Florida laws that could
jeopardize the closing, and that will put you one step closer to
selling your condo with peace of mind.
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DAVID HANNON is an attorney with a practice limited to real estate
transactions. He is a member of the Florida Bar and its Real
Property, Probate and Trust Section and is currently the President
of the Attorneys' Real Estate Council of Broward County.
For more information on real estate in your area, please visit the
Broward County Attorneys’ Real Estate Council’s Web site at
www.browardrec.com.
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