Amy Bales

Amy Bales

Amy Bales focuses on the areas of real estate, wills and trusts as well as entertainment, sports and intellectual property law. She is admitted to the bars of Florida, New Jersey and New York.

Ms. Bales earned her Juris Doctor from Rutgers University School of Law in Newark, NJ, where she was president of the Moot Court Board and editor of the Women’s Rights Law Reporter, founded in 1970 by Supreme Court Justice Ruth Bader Ginsburg. She received her Bachelor of Science degree in biology from Creighton University in Omaha, NE and a Doctor of Medicine degree from the Universidad Iberoamericana in the Dominican Republic.

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Closing costs in Florida

When purchasing a home in Miami or anywhere else in South Florida there are numerous fees, costs and expenses which get allocated between the buyer and the seller on the closing statement (or HUD-1 Settlement Statement).

These items are called closing costs and are typically allocated according to local custom or are, at times, negotiated between the buyer and the seller. Below is a list of the typical closing costs paid by both the buyer and the seller in a typical residential real estate transaction in Miami and South Florida.

It is advisable for a buyer or a seller to engage the services of an experienced Florida real estate attorney prior to signing the purchase and sale contract to not only review the terms of the contract, but also to make sure that these various closing costs are properly allocated between the buyer and the seller in the contract.

Buyer closing costs

Customary buyer closing costs include:

  • Down payment
  • Title insurance
  • Documentary stamps on the note
  • Intangible tax on the mortgage
  • Loan fees
  • Prepaid interest
  • Inspection fees
  • Appraisal
  • Survey fee
  • Mortgage insurance
  • Hazard insurance

Seller closing costs

Customary seller closing costs include:

  • Loan payoff
  • Broker's commission
  • Documentary stamps on the deed
  • Prorated real property taxes
  • Title search fee
  • Lien search fee

As a highly experienced Florida real estate law firm and title company, Federal Title continually guides both buyers and sellers regarding the proper allocation of closing costs and makes sure that what the parties contracted for is properly reflected on the closing statement at the time of closing so that there are no surprises on the day of closing.

What does a title company do?

In the wake of foreclosure problems stemming from improper documentation and representation, a title insurance policy has never been more valuable than it is right now in this current real estate market.

Clients often ask: What exactly does a title company do? And the easiest answer that I give them is, "Take a look at our website and view the videos."

At Federal Title, we conduct an extensive search of public records to verify the seller's right to transfer ownership. The purpose of all this research is to discover claims or defects (a.k.a. "clouds") that limit the owner’s right in transferring the property.

Lenders require title insurance when the purchaser obtains a mortgage to finance the purchase; this type of insurance is often called a lender’s title insurance policy to cover the bank’s interest in your property and to safeguard first position as a lien holder on your property.

At the time of closing an owner’s title insurance policy is also issued which protects you as the purchaser at the closing. An owner’s policy is your assurance of protection against economic loss if a title defect is ever discovered and a claim filed against your property.

The insurance premiums are only collected once, and your coverage will remain consistent for as long as you or your heirs retain an interest in your property or until you refinance the property at which point a new policy is issued.

Without the protection of an owner’s policy, you may be in jeopardy of losing your investment which stems from a cloud on title that does not appear in the public records such as:

  • Forged legal instruments (deeds, mortgages, wills, releases of mortgages)
  • Improperly recorded legal documents
  • False impersonation of the true property owner
  • Undisclosed heirs
  • Issues involving improper marital status
  • Documents executed under false powers of attorney
  • Deeds drafted by persons lacking legal capacity
  • Undisclosed spouses
  • Issues of rightful possession of land; which arise when a foreclosed property owner claims that they did not receive proper notice of the foreclosure.

In the event that a claim is filed against you as owner of your property, the title insurance will cover your legal expenses, court costs and related fees. If the claim against the property is valid, then the title insurance company will reimburse you for your loss up to the amount of the policy.

At Federal Title our attorneys are diligent in reviewing all documentation in an effort to assist buyers with the often times unexpected yet frequent legal matters that arise during the purchase and sale of real property. At Federal Title and Escrow there is always an attorney title agent on each transaction that is prepared to explain, negotiate and if needed, represent your legal interests in every transaction.

Reasons why you should hire a Federal Title attorney for your purchase of a short sale property

In the current economy, short sales have become an increasingly common part of our day-to-day business. Due to declines in market value, the contracted sale prices on many homes are not enough to satisfy all of the liens encumbering the property and to pay the transaction costs.

Therefore, inherent in these types of transactions is the need for legal advice and guidance that is separate and distinct from the run of the mill title service provided by non-attorney title agents.

Generally, non-attorney title agents may perform the following functions:

  1. Search the title and identify superior and subordinate liens;
  2. Gather information and prepare the form required by the lender to obtain a payoff statement;
  3. Obtain estoppel letters from each lien holder in which they commit to release their lien upon payment of a certain amount and/or satisfaction of other conditions;
  4. Prepare HUD-1 closing statements;
  5. Communicate information between the parties to the transaction; and
  6. Obtain payoff amounts, complete the closing and issue the requisite insurance policy.

These represent the bare-boned services provided by any title company and unfortunately, in any real estate climate, these general functions are not sufficient to protect the buyer and/or seller when unforeseen issues arise.

On the other hand, attorney title agents enhance the title services provided by being able to provide the client with an abundance of services, a few of them being:

Give opinions or explanations of the legal significance of any documents involved in the transaction;

  1. Clear title issues which require the services of licensed real estate attorneys;
  2. Counsel homeowners that sell their property in a short sale transaction as to the possibilities or legal ramifications of deficiency judgments and the impact of the proposed short sale on those issues;
  3. Counsel homeowners as to the strategy of negotiating a short sale as it might affect pending or future foreclosure and the implications of legal enforcement actions or other legal rights and remedies;
  4. Counsel the homeowner on the impact of filing for bankruptcy protection generally or as it relates to a short payoff and/or foreclosure; and
  5. Counsel the buyer as to whether the proper actions were taken in a pending foreclosure and whether there were any omissions that may cloud title.

At Federal Title our attorneys can assist buyers or homeowners with the often times unexpected yet frequent legal matters that arise during the purchase and sale of real property. At Federal Title there is always an attorney title agent on each transaction that is prepared to explain, negotiate and if needed, represent your legal interests in every transaction.

Case study: Title insurance and cash-only deals

I was glad to see an article the other day in the Wall Street Journal that more closely reflects our experience in the Coral Gables, Pinecrest, Miami Beach, Key Biscayne and Key West areas. There is no doubt that the local Florida real estate economy is being supported by cash buyers whom are often either foreigners or “snow birds.”

Whether or not real estate prices have “bottomed out,” the fact remains that there are excellent buying opportunities for those with enough cash or credit to buy in this economic climate.

Cash buyers are often reluctant to buy title insurance since it is not required when paying cash for real estate. Title insurance is viewed as an esoteric commodity that’s imposed by lenders but doesn’t actually serve a purpose.

Thus, buyers paying cash for real estate who are not required by the lender to purchase title insurance often decide to forego purchasing title insurance which is always a bad idea.

I have a client who came to us after having paid cash for a beautiful vacation home in Florida. My client bought the home from a bank that had obtained it through a foreclosure proceeding.

Because my client viewed the title insurance as an added, unnecessary expense, he opted not to buy title insurance. After spending hundreds of thousands of dollars in remodeling his vacation home, my client received a summons and complaint from the previous owner of the home stating that the previous owner was never properly notified of the foreclosure, thus the foreclosure was void, and the resulting sale of the home to my client was also void.

A quick review of the docket indicated that a person with the same name as the previous owner of the property had been served and had filed an affidavit with the court stating that he was not the owner of this property and they had served the wrong person.

Had my client bought title insurance he would be protected for the amount of money that he paid for his vacation home, and would have possibly avoided the entire predicament, as a settlement attorney at Federal Title would have reviewed the foreclosure docket to make sure that all of the proper steps had been taken in the foreclosure.

In Florida, get a title search before entering into a short sale agreement

In the past few years, short sale transactions have become more prominent in Florida due to the decline in the real estate market. Buying a home in a “short-sale” means that the lender is accepting less than the total amount due on the existing mortgage.

Most homes that are sold as short sales are already in the foreclosure process and as real estate values decline more lenders are accepting short sales or discounted payoffs, rather than holding a large inventory of real estate on their books.

Many people are under the impression that because they are buying a home in foreclosure through the short sale process, that they are receiving a home that is free and clear of liens and similar encumbrances. This is not the case; the new home owner will be responsible for liens that pass with the property such as property-tax liens, IRS liens, homeowners’ association liens and municipal liens.

Once a bank approves a short-sale, there is frequently a sense of urgency on behalf of the bank and the seller to sell the property which is often in foreclosure. The purchase and sale agreements are regularly as-is and void of title, lending, appraisal and inspection contingencies. Therefore, the buyer is often in the dark about the condition and state of the property that they are buying.

Serious buyers should proceed with caution and order a title search, which is often obtainable within 24 hours, prior to proceeding with entering into the short-sale purchase agreement for the purchase of the home. Once the title search is reviewed, the buyer may find that due to the existing liens, the house they were thinking of buying is not such a great bargain.

Here at Federal Title our attorneys can assist the buyers with negotiating with the lien holders directly to extinguish the liens for less than face value prior to closing. Federal Title will also assist the buyer in obtaining an owner's title insurance policy which protects the buyer from title defects that weren't disclosed by the seller at or before closing. Using Federal Title and Escrow Company will ensure that you do not get the “short end of the stick” on your short sale.

Governor Crist helps property owners affected by Gulf oil spill

Florida Governor Charlie Crist sent a strong message to Florida legislature to take action on behalf of homeowners whose property values have suffered as a result of the Gulf oil spill.

On July 21, 2010, the day after the Florida Legislature shunned Governor Charlie Crist’s plan for an oil ban, the Governor attempted to give property owner’s affected by the oil spill a break by issuing an Executive Order.

The Order states that property appraisers in the affected counties are authorized “to provide interim assessments of any real property in the affected counties that may have suffered a loss in value as a result of the Deepwater Horizon oil spill. The purpose of this assessment is to document the “current year claims against British Petroleum and any of its agents or subsidiaries responsible for the disaster and other responsible parties.”

These interim assessments are then to be made available to the affected property owners to be used as documentation of any loss in real property value sustained as a result of the Deepwater Horizon oil leak to substantiate claims against BP and other responsible parties relating to the loss in value of the property.

The documentation may also be used to substantiate claims for the economic loss resulting from liability for property taxes, which are based on the January 1, 2010 values despite a disproportionate reduction in the value of the real property caused by the oil spill.

Although the Governor does not have the authority to issue tax rebates, it sends a clear message to the Florida legislature that action must be taken, at least in the areas of Escambia and Santa Rosa counties which are the counties most affected by the oil spill thus far.

Filing Chapter 13 bankruptcy with a second mortgage

Curiously, I received several calls this week inquiring whether filing a Chapter 13 bankruptcy would “automatically” eliminate a second mortgage. The simply answer is “maybe.”

If the amount of your first mortgage is greater than the current value of your home then the bankruptcy court has the ability of declaring any second mortgage or HELOC loans unsecured debt by virtue of the fact that the value of the home does not support the mortgages.

Declaring the second mortgage or HELOC as unsecured debt has the effect that now these mortgages are treated as any other unsecured debt (i.e. credit card) and the amount that the homeowner is required to payback is determined by their income.

As many homeowners took out Home Equity Lines of Credit (HELOC) prior to the mortgage meltdown, which was fueled by inflated appraisals and undemanding lending practices, they are now left with mortgages on their homes that exceed the current value of their real estate.

Furthermore, several personal finance advisers have been urging that obtaining credit after filing bankruptcy is not as difficult as we have been led to believe. Therefore, it seems that more and more people are at least contemplating the possibility of filing for Chapter 13 bankruptcy.

Residential real estate prices rise in Miami market

Today provided a glimmer of hope for those of us affected by the Florida real estate market as reports indicated that after nearly three years of a downward trend, prices for residential real estate finally went up in April.

Experts state that the market is finding its equilibrium and point out that areas such as Coral Gables, Miami Beach and parts of Coconut Grove, have kept their prices up, which is in line with what we have been seeing here at Federal Title.

Although it may be too early to predict whether sales prices will continue to increase, it seems to be a step in the right direction.

After the federal first-time homebuyer tax credit

Prior to the April 30 deadline for the first time homebuyer’s tax credit, there was much discussion as to its effect on the market. Several experts indicated that the tax credit had little to no effect on the home buying activity during the spring market.

Although there has been some skepticism as to the effectiveness of that First Time Homebuyer’s Tax Credit had in stimulating the real estate market, several real estate brokerage firms are working to keep the initiative going by offering their own incentives.

For example Coldwell Banker has launched its “Buyer’s Bonus” program whereby the seller refunds 3% of the accepted price up to an $8,000.00 credit.

Something Florida homeowners should consider heading into hurricane season

As we enter the hurricane season homeowners should be aware that many attorneys will possibly decline the opportunity to hesitant to represent homeowners in contingent fee insurance claims.

Why, you ask?

Well, Florida property that meets constitutionally defined size limitations and is owned by a natural person, who is a Florida resident, is protected by Florida's Constitution against unsecured creditors – including credit card companies, hospitals and now even attorneys.

Thus, obtaining title to a primary residence in Florida provides protection against unsecured creditors including credit card companies, hospitals and now even attorneys.

In a recent decision the Third District Court of Appeals denied a law firm’s motion to impress a charging lien on a homeowner’s insurance proceeds for damages caused by hurricanes due to the court’s finding that the insurance proceeds were exempt homestead property.

After the law firm had secured the proceeds for the benefit of the client and policy insured, the client terminated the law firm’s contingent fee representation and sought to shield himself from any responsibility to compensate his counsel by claiming the insurance proceeds were homestead property.

The court ruled in the homeowner’s favor because as a matter of public policy in the state of Florida one cannot divest himself from the exemptions afforded him through the constitution through an unsecured agreement.

For Florida LLCs entering into a real property lease

In Florida, Limited Liability Companies (LLC) entering into leases or other types of real estate conveyances must have their managing member's signatures accompanied by two witness signatures in order to comply with the two-witness requirement of Florida Statute Section 689.01.

Failure to do so will render any lease or other disposition of property an unenforceable conveyance.

Florida Statute 689.01 governs conveyances of real estate including leases of more than a year. Section 689.01 states in part that for a lease of more than one year there must be a "writing, signed in the presence of two subscribing witnesses by the party... granting...such...term of more than 1 year..."

However, the statue provides for an exception stating that corporations may convey in accordance with the provisions of 689.01 or 692.01 or 692.02 which govern conveyances by corporations and do not have the two-witness requirement of 689.01.

The Florida Limited Liability Company Act, chapter 608, Florida Statutes ("The Act") has no similar provision. The Act provides that an LLC may dispose of property or enter into leases; and it further provides that members and managers of the LLC's may sign and deliver any instrument transferring or affecting the LLC's interest in real property.

Although it provides who may execute a lease on behalf of an LLC it does not provide for conveyances of real property which falls entirely under Section 689.01.

Thus, Florida courts look to Florida Statutes 689.01 and have found that unlike corporations, LLC's must adhere to the strict two witness requirement formalities imposed by section 689.01. Thus, any commercial lease in Florida entered into by an LLC must be entered into in the presence of two subscribing witnesses.

Who is entitled to the surplus from mortgage foreclosure sales in Florida?

In Florida, second mortgage lenders have been getting the "short end of the stick" when it comes to short sales and foreclosures. The second mortgage lenders are left with either unsecured promissory notes for the balance of the monies owed, or they settle for a short sale for a fraction of the value of the second mortgage.

As borrowers in default get more savvy, they file for bankruptcy as the foreclosure action proceeds in order to wipe out their personal unsecured liability under the second mortgage. Thus, second mortgage lenders are either not putting up a fight in court or attempting to become creative in their efforts to collect on their debts.

Short sales, foreclosures and taxes ... oh my!

In the light of the current residential real estate market, short sales and foreclosures in Florida are becoming more commonplace. As with standard real estate transactions, taxes play a large part in the closing process when it comes to short sales and foreclosures.

In Florida the closing agent is responsible for calculating the documentary stamp tax, intangible tax and other real estate taxes depending on the transaction.

For the standard residential closing this usually means documentary stamp tax on the deed, documentary stamp tax on the mortgage (if there is one), intangible tax on the note and proration of the annual ad valorem taxes.

Needless to say, real estate closings in Florida are not always simple. Add a short sale or foreclosure into the mix, and a real estate closing becomes that much trickier.

Real estate taxes and short sales

Short sales are now very common and occur when a distressed seller is in default on his mortgage, and the home's market value has declined to such an extent that the purchase price of the property is less than the remaining balance on the existing mortgage.

Since these properties are often purchased at a deep discount, Florida title agents have questioned what value to base their tax calculations upon – the value of the purchase price plus the amount of the loan forgiven or the original price of the home.

After careful consideration the Department of Revenue stated that in arm’s length transactions, documentary stamps are only due on the purchase price rather than the purchase price plus the amount of dept forgiven.

See Florida Statute Sec. 201.02.

Real estate taxes and foreclosures

Florida foreclosures are handled in a similar matter. If a lender decides to foreclose against a mortgagor and the successful bidder of the Florida property receives a certificate of title after a proper foreclosure and sale, then the documentary stamp tax is due on the certificate of title and is computed on the successful bid at the foreclosure sale.

The same is true is a sheriff’s deed is executed pursuant to a sheriff’s sale.

However, if a bank agrees to accept a deed in lieu of foreclosure, then the documentary stamp tax is calculated based on the remaining balance of the mortgage plus any accrued unpaid interest. This can quickly amount to a very high number considering most default interest rates on loans of $500,000 or more are approximately 24%.

Settlement proceeds subject to income tax withholding?

* Editor's Note: As of 2016 the amount of tax required to be withheld is 7.5 percent of the "total payment" to a nonresident individual and 8.25 percent to a nonresident entity. For the most up-to-date information regarding Maryland withholding requirements, visit the Maryland comptroller website.

Maryland nonresident sellers beware: Your settlement proceeds are subject to income tax withholding. Surprisingly, many agents do not realize that their nonresident sellers may acquire a Certificate of Full or Partial Exemption from the tax, as discussed below. Indeed, we strongly advise agents to assist their nonresident sellers in applying for the Certificate of Exemption as soon as the contract of sale is executed; application for an exemption must be made to the Comptroller of Maryland no later than twenty-one (21) days before closing and with such a Certificate, the nonresident seller can walk away from settlement with all of his proceeds of sale.

In 2003, the Maryland Legislature passed an Act mandating the withholding of income tax on the sale of all real property by nonresident individuals and nonresident entities. Settlement officers are directed to ensure sufficient funds are withheld from the closing and are also required to pay the withheld tax to the recording office at the time the deed is submitted for recordation. The amount of tax currently* required to be withheld is 7.5 percent of the "total payment" to a nonresident individual and 8.25 percent to a nonresident entity. Indeed, the Clerk of the Land Records office will not accept an instrument for recording unless the withheld tax is paid or the instrument refers to one of the exemptions from the withholding requirement.

Withholding requirement exemptions are:

  1. A certification under penalties of perjury or an acknowledgment in the deed that the seller is a resident of the State of Maryland
  2. A certification under penalties of perjury or an acknowledgment in the deed that the property sold is the seller's primary residence as determined under the Internal Revenue Code
  3. The property is transferred pursuant to foreclosure or a deed in lieu of foreclosure
  4. The property is transferred to the government
  5. A statement in the deed indicating that the consideration paid for the property is zero; and
  6. A certificate issued by the Comptroller of Maryland stating that no tax or a reduced amount of tax is due on that particular sale or that the seller has provided adequate security to cover the tax liability.

With regard to exemption to number 6. (six), above, the Comptroller has noted several circumstances under which he will issue such a certificate. A sample of those circumstances are:

The tax due has already been paid;

  • The transfer is made on an installment sales basis under Section 453 of the Internal Revenue Code;
  • The seller is a tax exempt entity under Section 501(a) of the Internal Revenue Code;
  • The transfer is to a partnership in exchange for a partnership interest so that no gain or loss is recognized under Section 721 of the Internal Revenue Code;
  • The transfer is a like-kind exchange under Section 1031 of the Internal Revenue Code; or
  • The transfer is between spouses or incident to a divorce in accordance with Section 1041 of the Internal Revenue Code.

Frequently asked questions

Is the amount of tax withheld calculated on the sales price or the net proceeds?

The "total payment" on which the Maryland income tax is withheld is equal to the total sales price for the property less (1) debts of the seller securing the property that are being satisfied at closing; and (2) expenses of the seller arising out of the sale of the property that are disclosed on the settlement statement. However, debts being satisfied at settlement that are secured within ninety (90) days of closing cannot be deducted from the "total payment" calculation.

How are taxes withheld where there are both resident and nonresident joint sellers?

The "total payment" will be divided into as many shares as there are sellers. Each seller's residency will then be separately determined and any share of a nonresident will be subject to withholding.

If income tax is withheld on the sale, does the nonresident seller still have to file a Maryland nonresident income tax return?


If a nonresident seller believes too much money was withheld, can he request a refund before filing the nonresident income tax return for that year?

The seller may file an Application for Tentative Refund of Withholding on Sales of Real Property by Nonresidents with the Comptroller sixty (60) days or more after the tax was paid.

Is tangible personal property sold with the property by a nonresident seller also subject to withholding?


About the author

Jennifer C. Concino is a partner of the firm Tobin, O'Connor, Ewing and practices in the areas of estate and trust planning and administration, probate, guardianships, non-profit entities, real estate and business law.

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