Foreign National Seller of Florida Real Property- FIRPTA Withholding FAQ’s!

If you are a foreign national or you are assisting a foreign national client in selling real estate, you are most likely familiar with Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”).  When you are handling a real estate transaction involving a foreign seller, depending on the value of the property and how it will be used, the transaction is generally subject to a 15% withholding on the purchase price due to FIRPTA.   The Act places the responsibility of the Buyer for this withholding.

For the purposes of FIRPTA, a foreign seller is defined as either a non-resident alien individual, a foreign corporation not treated as a domestic corporation, or a foreign partnership, trust or estate.  A person is considered to be a resident alien under FIRPTA if they have legal permanent resident status in the U.S. (they have a Green Card), and they meet the substantial presence test which sets a minimum number of days they must be physically present in the United States.  

The formula for the substantial presence test is as follows:

  • 31 days during the current year;
    PLUS
  • 183 days during 3-year period
    • All the days present in the current year, &
    • 1/3 of the days present in the first year prior, &
    • 1/6 days present in the second year prior.

If you are buying or selling a property, and the Seller is a foreign national, it is highly recommended that you obtain legal counsel to guide you through the complex particulars and ensure that the financial obligation you are about to embark on is drafted specific to your needs and in your interest. For any questions or assistance, please contact us as we would be happy to guide you.

Florida Amended Lease Requirements- Bill Signed into Law!

At the begining of the year, the Florida legislature passed a bill amending Florida Statutes § 689.01 which eliminated the requirement of having two witnesses for the execution of a lease on real property.


On June 27, 2020, Governor De Santis signed this bill into law. Until such time, Florida law has clearly stated that a lease for a term of more than one year could be created only by an instrument in writing signed in the presence of two subscribing witnesses.

Under the new amended law, which is now in effect, no subscribing witnesses will be required for leases of real property in Florida.

As a firm who has assisted both Landlords and Tenants in drafting and reviewing commercial and residential leases, we pride ourselves on keeping current with changing requirements and ensuring that no Landlord or Tenant is left executing a lease which is unclear or subject to contesting. 

Should you find yourself entering into a lease, whether commercial or residential, it is highly recommended that you obtain legal counsel to guide you through the complex particulars and ensure that the financial obligation you are about to embark on is drafted specific to your needs and in your interest. For any questions or assistance, please contact us as we would be happy to guide you.

Business legal document concept : Pen and glasses on a lease agreement form. Lease agreement is a contract between a lessor and a lessee that allow lessee rights to use of a property owned by lessor

Title to Real Estate Property!

 

A deed is a legal instrument used to convey real property. There are three main deeds in Florida, or three methods of transferring property. They vary depending on the guarantee that is offered by the seller, the type of property, or reason for transfer.

1) General Warranty Deed

  • Most complete form of ownership, or highest level of protection to buyer
  • Guarantee that grantor (seller) has legal title

2) Special Warranty Deed

  • Provides limited warranty of title
  • Seller guarantees he/she has not adversely affected the title to the property during their ownership period
  • Common for transactions with trustees, or personal representatives, & foreclosures

3) Quitclaim Deed

  • No warranties or guarantees from seller
  • Most risky form of ownership
  • Conveys the interests of the grantor (seller) but grantor does not represent he/she has any rights to convey
  • Common to transfer property among family members or when dealing with a divorce
  • Common to clear defects in title

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In most real estate transactions, we recommend obtaining a general warranty deed in congruence with a title insurance policy to ensure you have complete equity, or ownership in your new property & proper protection for any unexpected encumbrances. However, every case is different and you should discuss your options with a Florida Real Estate Attorney.

Stay tuned for our next blog on – which Deed is right for you!

Putting Your Real Estate in a Florida Land Trust

A Florida land trust is a method for holding legal title to real property. The beneficiary owns the Florida land trust, has power of direction over the trust, and has control over the property that is in the trust (the person creating the land establishes the land trust and is often one of the beneficiaries). The trustee holds the title to the property for the benefit of the owners or beneficiaries.

There are two steps to putting your property in a Florida land trust (Consult your Florida Real Estate Attorney for assistance):

  1. Deed in Trust; and
  2. A Florida Land Trust Agreement.

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Below are some of the benefits of a Florida Land Trust:

  1. Allows for the private transfer of property – your name is not recorded in the public record like most property transactions
  2. Limits liability – trustee is free from liability, therefore you can allow for a corporation to be the beneficiary and then limit personal liability as trustee
  • Property held in land trust is also not encumbered by judgments made on beneficiaries
  • Work with your Florida Real Estate Attorney to structure your trust to best avoid personal liability
  1.    Avoid probate
  • It is common for land trust to be considered a “will substitute”
  • Contingent beneficiaries are mentioned in the trust
  • No Florida Documentary transfer tax is due when transfers are among beneficiaries (this is on a case-by-case basis).
  1.     Improves efficiency in transactions with multiple buyers or owners
  • Allows for only the trustee to sign documents to complete the transaction
  1.     Homestead Exemption
  • If beneficiary is a Florida resident, then trust may qualify for Homestead Exemption
  1. Tax benefits
  • No annual filing fees with state of Florida
  • No additional tax return or tax I.D.

There are a number of benefits associated with putting your property into a land trust. For example, Walt Disney actually acquired the property for Walt Disney World in Florida through the use of a land trust. This allowed for additional privacy, and reduced the chance that prices in the area would increase due to anticipation of Disney’s plans for the community.

Be sure to contact your Florida Real Estate Attorney to set up a land trust, as there are Florida Statutes that you must comply with. Your Florida Real Estate Attorney should draft a deed to the trustee, and a written land trust agreement. A disclosure form to the IRS must also be filed to note that the trustee is acting for the beneficiary, this is where you should get your Certified Public Accountant involved as well. Both your Florida Real Estate Attorney and Certified Public Accountant will work together in order to set up your asset structure.

Make sure your Hotel is ADA Compliant!

“Drive by” ADA lawsuits are once again on the rise. These professional plaintiffs and their unscrupulous lawyers know that most warranties on pool lifts installed in 2012-2013 have expired and that some pool lifts are in need of repair. Now it is more important than ever to be proactive with your ADA compliance.
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These plaintiffs are hoping that you won’t take the time or spend the money to get the lifts repaired. Don’t be an easy target!  Get your pool lift inspected and repaired today. The money you spend now will save you even more money and the aggravation of a lawsuit in the future.  If your property is not ADA compliant, the question is not will I get sued, but when. We can refer you to vendors who provide ADA inspections, so don’t delay. Avoid a lawsuit now — make sure your pool lift and your entire property is ADA compliant.
Attorney Gulati is a proud Florida Ambassador of one of the largest organizations in the nation, Asian American Hotel Owners Association, representing thousands of hotel owners nationwide.
Complimentary Source: AAHOA

Why do I need a Lien Search?

Recently, the Gainesville Sun reported that a couple could not get a permit from the city when they wanted to put a screen enclosure on their back porch. That’s because there was an expired permit on the property that was 10 years old. The couple has owned their home since 2010 and had no idea  that was the case.

The Sun says the issue was that a roofer had completed a partial shingle re-roof without getting a final inspection from the county to close out the permit. Because the company was still in business, they were eventually able to resolve the issue.

It’s important to note that the homeowners were VERY LUCKY in this story. Because in many open/expired permit cases people have to spend thousand to close out permits. In a lot of cases, the permit was not closed out because the work was done incorrectly and the new owner has to pay for these corrections.

Pretty much one-out-of-four of our real estate deals have an open permit, expired permit or municipal lien issue.

I know firsthand that a LOT of title pro’s in that area will say that they don’t need to do these searches, but THIS is a prime example of how you can be mis-led to believe your property is “free and clear.” Always obtain a municipal lien search before purchasing your real estate.

New Land Trust Law

Source: Professional Lien Search

Americans with Disabilities Act Lawsuits Impacting Hotel Owners

It has come to our attention through our clients and other Hotel Owners/Hotel Management, that there has been a significant increase in the number of lawsuits against hoteliers for violations of the Americans with Disabilities Act (hereinafter “ADA”). A typical scenario is that a single plaintiff files over 50 lawsuits against hoteliers in a specific geographic region that has been inspected. In each of these cases, the plaintiff’s central issue focused on pool lift regulations. It is therefore extremely important for hoteliers to understand the ADA requirements and what you need to do to comply with the law. We have helped defend some of these lawsuits and had success helping our clients settle them, unfortunately this is something you cannot ignore.

“The United States Department of Justice has compiled a list of requirements to encourage compliance with pool lift regulations, a set of common questions and answers and checklist for lodging facilities. Knowing your rights and responsibilities is the best way for you to protect your businesses, your investments and your families from parties who are looking to exploit these issues to turn a quick profit at your expense.”

Please follow the links below to review these rules and ensure your hotel properties are compliant with the law:

ADA Pool Lift Requirements
ADA Checklist for New Lodging Facilities

As an Ambassador of the Florida Region of AAHOA and a Florida Hotel Attorney, Attorney Sarah Gulati, would love to hear all your concerns and issues regarding ADA lawsuits targeting pool lift compliance. 

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Source: AAHOA bulletin~by Chip Rogers AAHOA President & CEO.

Tips for a Smooth Real Estate Closing

After a long battle with research, applications, real estate agents, negotiations, and etc., the purchase contract has been finalized and you’re finally ready to close the deal. You will want to make sure that all documents and disclosures are in order and that nothing has been left out. We often see that all the formalities have been taken care of, but there is one page that was not signed, which could effect the binding contract.

Depending on what the contract states, your Florida Closing Attorney or Title Company will conduct a title search in order to secure the title and insure that there are no liens or “clouds” on the property upon the transfer of the Property. Lenders will usually require this anyway if applying for a home loan or re-financing.

As far as closing costs go, if you are financing your home, your lender will provide a good faith estimate which identifies all costs involved. Some expenses related to the mortgage or property itself are either prepaid or paid at closing, which must be prorated between the buyer, seller, and lenders at the closing. These expenses can include real estate taxes, utility costs, and condo assessments that are prorated between the parties. Be sure to clarify between parties what these pro-rations will be at the closing. Many times we see fees charged to the wrong party, make sure to consult your Florida Closing Attorney.

The current document that’s used to list all itemized payments and credits of the buyer-seller transaction is the HUD-1 statement. However, beginning in October of this year a standardized Closing Disclosure document will be implemented which will usually be provided by the lender for the closing. Currently, the most important documents to review during a closing are the Good Faith Estimate, HUD-1, and TILA/RESPA disclosure (Truth In Lending Act/Real Estate Settlement Procedures Act). However, these will be replaced by the Loan Estimate, Closing Disclosure, and Closing Settlement documents. Stay tuned for more information on this!

Florida Real Estate

What should you bring and what you should ask for at closing?

Make sure you bring two forms of photo identification. The closing agents involved usually require a driver’s license or some other form of government identification. Make sure that all keys and automatic garage door openers are transferred to the purchasing party (this includes mailbox, utility shed, basement keys, garage door openers, etc.). Handing over the keys to the buyer at the end of a closing is known as “delivering possession of the property to the buyer.” Which means the Buyer gets their keys and Seller gets paid for his home.

If you have any questions or concerns regarding the closing process, what is needed at a closing, or what information should be disclosed to you, please contact your Florida Real Estate Attorney today!

Beware of Non-Government Affiliated Trademark Solicitations!

 

blog4Please be aware that private companies that are not associated with the United States Patent and Trademark Office (“USPTO”) are using trademark applications and registration information from the USPTO’s databases to issue trademark-related solicitations. These solicitations may include offers for legal services, for trademark monitoring services, record trademarks with U.S. Customs and Border Protection and even to “register” trademarks in the company’s own private registry.

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Some applicants have reported paying fees to these companies, mistakenly under the assumption that they were paying mandatory fees to the USPTO.  If you receive documents that appear to be from an official government agency, please be sure to read the fine print. If an address is provided, always perform a search to verify that the location is legitimate. Sometimes these companies will provide an address for a vacant building or office space. Usually, an official correspondence will be from the “United States Patent and Trademark Office” in Alexandria, VA, and if by e-mail, specifically from the domain “@uspto.gov.”

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Unfortunately, if you have already submitted any payment to these companies for services offered, the USPTO is unable to provide a refund. The USPTO encourages you to file an on-line consumer complaint with the Federal Trade Commission (“FTC”), at www.FTC.gov. If you receive one of these solicitations and you’re unsure of its legitimacy, or if you are interested in filing for a new trademark, we can help! Contact us today so that our legal professionals can discuss your options.

What is a Phase 1 Environmental Site Assessment and Do I Need One?

Many times we get asked the following question: – Do we really need a Phase 1 Environmental Site Assessment?

Well, the answer is, it depends, but it is highly recommended.

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The purpose of a Phase 1 Environmental Site Assessment is to use a consistent approach to identify any existing or potential environmental conditions that may be present or affect a real estate property in question. Purchasers of real estate must conduct an “all appropriate inquiry” to qualify for the innocent landowner defense under the Federal Comprehensive Environmental Response, Compensation and Liability Act (“CLERCA”). Having a Phase 1 Environmental Site Assessment (“ESA”) conducted on the proposed real estate will mitigate any damages and protect your assets by proving that you as a purchaser legally met your due diligence obligations.

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    Gulati Law