Category: blog

“Real” Estate in the Metaverse

Posted on by Randy Gilbert

What is the Metaverse?  The Metaverse is the next version of the internet.  Interest in metaverses skyrocketed when Mark Zuckerberg announced Facebook is changing its name to Meta, and spending $10 billion developing its own metaverse.  We have gone from desktops to laptops, tablets to cellphones, and now to VR headsets and glasses.  We have also evolved from texting words and emojis, to uploading photos and .gifs, streaming video, and now we can enter virtual worlds surrounding ourselves with augmented realities.  The metaverse is a Tron like technology.  A digital world literally built around people.  

The metaverse’s allure is that it allows users to live inside a mirage, which is completely surreal.  Offering an out-of-body, mind-altering false sense of being physically present inside a digitally created alternate universe – a Metaverse.  In the three-dimensional (3D) metaverse, users can virtually: walk around and explore, meet other users, work, learn, shop, create, socialize, entertain, game, collaborate, team build, relax, meditate, travel, chill out, and play.  In fact, until now, the most common use for the metaverse was gaming like Fortnite and Minecraft. 

Property in the Metaverse.  Say Beatlejuice 3x and you may summon a trickster ghost from the netherworld.  But if you say, “Location, Location, Location” you may accidentally transport yourself into the three-dimensional (3D) metaverse. 

In this virtual world akin to MTV’s ’“Cribs,” users can adorn VR glasses and instantaneously teleport inside a palatially immaculate, virtually decorated, dreamhome-space.  Graphically design your meta-mansion in any style you like; contemporary, modern, farm, colonial, medieval, the sky is the limit.  Decorate your virtual mansion with photorealistic and lifelike recreations of priceless art, designer furniture, flooring, tapestries, fireplace, landscapes, water features, and any ornamental accessory your heart desires.   Set your view to overlook mountains out of one window, a cityscape out the other, and the fantasy of sunsetting ocean view elsewhere.  The opportunity for embellishment and extravagance is boundless. 

Put up family pictures and videos.  Invite friends over from Dubai, Chicago, England, Singapore, to play games, hang out, have a business meeting, or just watch a movie. 

How to Access the Metaverse?  There is no single app named the Metaverse that can be opened.  Unlike the internet the Metaverse (or stated more accurately, “a metaverse”) is/are not interconnected. The Metaverse is actually different digitally created universes, currently existing on only a handful of platforms, some of which you will need special VR headsets to use.

Where to Buy Property in the Metaverse? People can buy, sell, develop, and lease virtual property on platforms such as: CryptoVoxels, Decentraland, Mirandus, Sandbox, Somnium Space, and Upland.  Facebook plans to launch Horizon Homes as their virtual properties, marketing them as a custom social space. 

Why Buy in Property in the Metaverse?    Digital real estate can serve a variety of purposes, from retail showrooms, to event spaces, homes, and virtual offices. Luxury brands such as Louis Vuitton, Gucci and Burberry have already entered the metaverse through designer NFTs.   

Toronto based Tokens.com, bought an estate in Decentraland in November for 618,000 MANA, the equivalent of $2,428,740.00 (i.e. $3.58 per MANA at the time).  Crypto is highly volatile, so as of the date of this article the price of MANA was down more than $1.00 since the purchase.  The purchase of that property was made up of 116 smaller parcels, measuring 52.5 square feet each, making 6,090 virtual square feet in size. The space is in the “Fashion Street” area of Decentraland’s map and Tokens.com said it would be used to host digital fashion events and sell virtual clothing for avatars.  That’s right, people pay real money for virtual clothes. Virtual possessions generate real sales in the “metaverse.” Decentraland also has a shopping mall called Metajuku, and the Ice Poker Casino where users can gamble.

Shortly thereafter, Republic Realm bought a plot in Sandbox for the equivalent of $4.3M using the cryptocurrency SAND, from Atari SA, marking the biggest metaverse property sale.  In the last week of November 2021, $70.6 Million in sales closed 4,400 metaverse properties.  Luxury realtors Tal and Oren Alexander, reported to The Real Deal that they were partnering with Republic Realm to build “architecturally significant master-planned community that will span at least three of the virtual worlds.”  And what metaverse property in Sandbox would be complete without a virtual mega yacht?  That’s right, the MetaFlower virtual mega yacht sold for the equivalent of $650,000.  

Metaverse Group, has a significant portfolio of digital real estate, and plans to spin off its holdings as the first Metaverse REIT.

Emcee Studios announced plans to acquire a 1.2M Sq. Ft. building in L.A., intending to hire tens of thousands of creators and innovators as part of the largest metaverse hub in the world. 

Miami based venture capital firm CloudTree Ventures, which assembled in late 2021, foresees the crossover of technology used in gaming as the driving future for industries within the metaverse. 

Commercial Branding in the Metaverse.  As mentioned earlier, shopping centers are being built inside of the metaverses.  JPMorgan opened a lounge inside Decentraland.  Walmart, Adidas, Nike, Gucci, Disney and Warner Music, among others, plan to develop virtual storefronts, offices, and entertainment venues.

Metaverse for schools and education.  Locally, the David Posnack JCC in Davie, Florida recently did a groundbreaking on its “George Gottlieb Holocaust & Jewish Education Program.”  Visitors can walk through Anne Frank and her family’s hiding place in VR, just as if they were really there in Amsterdam.

Is the Metaverse a Fad?  It’s hard to tell yet whether the metaverse will bubble like the dot.coms or start an entirely whole new asset class.  The global pandemic fueled interest in the metaverse.  When people were sheltered in lockdown, they began looking for alternate realities.  But as COVID-19 cases downswing, and public and gathering spaces become fully accessible, the need for meeting within metaverses as opposed to physically becomes less necessary.  But then again, IRL (short for “In Real Life”) there is a paucity of raw land, which is a limitation the metaverse does not have.  Digital land sales overall surpassed $500 million in January 2022.  Younger generations are not just gaming in the metaverse, but also living in it to an extent.  And if that is not enough, corporate titans like Facebook, actually changed their name to Meta, and with billions at stake, are betting heavily on the metaverse. 

How do You Buy Property in the Metaverse.  Land and other items in your chosen metaverse are purchased typically with cryptocurrency.  Some metaverses have their own crypto currency.  Decentraland are sold in the form of non-fungible tokens (NFTs), a kind of crypto asset.  Crypto enthusiasts buy land there as a speculative investment, using Decentraland’s cryptocurrency, MANA.  

Valuing Property in the Metaverse.   Similar to an appraisal users are advised to compare values of other like kind properties, look at statistics such as monthly active-user lists, see whether the company that launched the metaverse where the property is located had prior success in the video gaming or other platforms.

Are there Real Estate Companies in the Metaverse?  Metaverse Properties purports to be the first virtual real estate company, offering to help consumers: buy, sell, and even lease properties on different metaverse platforms; develop virtual properties; manage properties; consult, and market metaverse properties.

Are Real Estate License Required to Buy, Sell, or Lease “Space” in the Metaverse?  Probably not.  Florida Statute §475.01(1)(i) defines “‘Real property’ or ‘real estate’ as any interest or estate in land and any interest in business enterprises or business opportunities, including any assignment, leasehold, subleasehold, or mineral right; however, the term does not include any cemetery lot or right of burial in any cemetery; nor does the term include the renting of a mobile home lot or recreational vehicle lot in a mobile home park or travel park.’”

Using the Metaverse to Market “Real” Properties.  To entice buyers, developers are reportedly offering to build customers both a luxury home in Miami and a twinning digital replica on the metaverse.  The idea being buyers could maintain a normal life at home and then while traveling have a digital version in the metaverse to host virtual gatherings from around the world.

Photorealistic Avatars in the Metaverse.  Also, it bears mentioning, that the first thing you need to do before stepping into a Metaverse is to create your own avatar.  Instead of static profile pictures, people represent themselves in the Metaverse using a wardrobe of avatar skins.  Currently the avatars look cartoonish.  But just like shopping in real life, you can customize your outfits, sneakers, style your hair, buy wigs, wear contacts to change your eye color, and even accessorizing.  Imagine digital Nikes and a Gucci Jacket. People care what their avatars are wearing reported Reuters which produced a video of various wearables, and identified a virtual kimono vendor as making around $5K a week.  Avatars are digital figurines used to represent yourself physical form in a metaphysical universe.  Moreover, it is likely users will have more than one avatar.  Using realistic looking avatars for work, a stylized avatars for socializing with friends, and a fantasy avatars for gaming.  But significant developments are in the works to make Codec Avatars.  Codec Avatars are a recent class of learned, photorealistic face models that accurately represent the geometry and texture of a person in 3D (i.e., for virtual reality), and are so indistinguishable from video that security measures are also being developed to prevent identity theft.   

Conclusion.  The metaverse is a revolutionary evolutionary three-dimensional virtual world for social platforms and connections.   An ability to instantly, and digitally, float into a utopian society, to feel physically present in your own Shangri-La, or retreat and hangout with family and friends in a shared sense of space, regardless of how far apart they really are.  A fully immersive out-of-body embodiment inside the internet.  Currently, the technology seems a bit weak, with floating pixelated cartoony looking avatars but there is no doubt that will soon change once Facebook delivers on its promise of photorealism.  

DISCLAIMER:  Topics discussed are general concepts, not intended to constitute legal advice, accuracy, nor completeness, and may not be relied upon as such; consult an attorney or accountant.  The author Randy Gilbert, J.D. is neither an attorney nor an accountant.  FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.” ®

Spotting Title Company “Junk Fees”

Posted on by Randy Gilbert

Consumer Financial Protection Bureau (CFPB)  On January 26, 2022, the CFPB launched an eight (8) page initiative to crack down against Junk Fees charged in real estate.  The CFPB is a unit within the Federal Reserve charged with ensuring markets for consumer financial products and services are fair, transparent, and competitive.[1]

Spotting Junk Fees.  Companies are increasingly charging inflated, back-ended fees, to households and families.  In order to make another quick buck, additional fees are piled one-on-top-of-the-other to unsuspecting consumers. The hidden fee lays dormant, springing up when the consumer is so far along in the transaction that it becomes commercially impracticable for them to do anything about it other than pay.   Consumers are forced to pay to play or risk being in default or otherwise suffer damages.  Baiting consumers into a seemingly low price only to play the shell game by revealing and switching the original cost for one much higher, prompted us years ago to combat an industrywide practice by federally trademarking our own “No Junk Fee Guarantee!®” 

It’s the bottom line that matters.  It kills me when a realtor tells me how insultingly cheaper someone else is, to the point of impossibility for that title company to survive.  Our response is simple, “Ask your title company to give you what’s called a closing disclosure (CD), a HUD, or Settlement Statement, and we will show you all of their padded and unauthorized fees.”  Realtors are shocked when they see that title companies are either up charging for reimbursable expenses, or charging multiple line items on top of their quoted base price.  Alone the fees look small, but cumulatively those fees add up big time!  It’s like going to a fancy dinner and thinking well I ordered a $15.00 cocktail, and a salad, and an appetizer, and an entrée, and desert but when you get to the end of the bill those line items add up to over $100 per person at the dinner table. It’s the bottom line that matters. 

Most of the time we’ve found that title companies who hide their fees actually windup charging more in the end than what we charge.  This article is a call to action and for more transparency in the title insurance industry, which in turn will create a more fair marketplace by enabling consumers to accurately compare apples-to-apples. 

Junk Fee defined.  Junk fees obscure and distort the free market systems by concealing the true cost of a product and undermine a competitive marketplace.  Junk Fees include: 

  • Fees for things people believed were covered by the baseline price of a product or service
  • Unexpected fees for a product or service
  • Fees that seemed too high for the purported service, or
  • Fees where it was unclear why they were charged

Examples of Junk Fees in Real Estate Closings.  Our title company charges a flat upfront and fully disclosed “Settlement Fee” (also known as fees for “Closing Services” defined more fully below) regardless of the price of the property.  In large part, the “Settlement Fee” is where title companies play gamesmanship and fudge numbers.  When I see an unusually low “Settlement Fee” it almost a virtual certainty that there are going to be additional hidden fees.  The Settlement Fee may appear artificially low, and this is what many title companies advertise, but their published Settlement Fee shadows all of the other unmentioned line item and ticky-tacky fees they add at closing.  As outlined below, virtually all services provided by title companies really should be included in their “Settlement Fee,” without a bunch of additionally added line items for more fees.  Many title companies advertise low attractive rates, but often pad their pockets, and sweeten their coffers, by adding hidden undisclosed extra fees at the closing table like:

(1) Wire Fees.  I regularly see $75.00 wire fees being charged.  According to the Commission, with very limited exception, this fee should be included in the settlement fee and not be charged as an extra;[2]

(2) Postage, Mailing, and Handling Fees.[3]  I regularly see $100.00 fees being charged for DHL or FedEx.  According to the Commission, with very limited exception, this fee should be included in the settlement fee and not be charged as an extra; 

(3) Storage Fees. [4]  Title companies are already obligated to store their records.[5]

(4) Warehousing Fee; [6]

(5) Document Retention Fee; [7]

(6) Electronic Storage Fee; [8]

(7) Archive Fee; [9]

(8) Scanning Fee; [10]

(9) Printing or Copy Fee; [11]

(10) Thumb Drive of Cd Fees; [12]

(11) Notary Fees.[13],[14]

(12) Origination or Loan Service Fee – we are a title company not a lender;

(13) Title Exam Fee or Title Review Fee in addition to a Settlement Fee;

(14) Recording Service Fee;[15]

(15) Escrow Service Fee; [16]

(16) Outside Notary Fees (this does not include Remote Online Notary Services Fla. Stat. §117.275);[17]

(17) Convenience Fees;

(18) Telecommunication Fees (i.e. faxes, long distance); [18]  

(19) Up charges to title commitments, condo or HOA estoppels, and municipal lien searches; [19]

(20) Title Update or Recertification Fee – This is a normal part of the process, the public records should be reviewed again after the parties sign at the closing and prior to issuing the title policy, this is called “insuring the gap”;[20]

(21) Obtaining Mortgage Satisfactions; [21]  

(22) Waiver of excess/overages being held in escrow if $25.00 or less.[22] 

(23) When you buy a title insurance policy and pay the “Title Insurance Premium,” that price already includes “Primary Title Services” (Explained in more detail below).  That means title agencies are not allowed to charge extra for “Primary Title Services” such as:

Examples of Junk Fees by Attorneys in Real Estate Closings   

The Florida Bar has published numerous ethics opinions relating to proscribed attorney fees in real estate transactions.  Mainly the focus has been on attorney conduct when performing title services for buyers, sellers, lenders, whether non-clients are paying for the title insurance services, disclosure, and informed consent.  Scenarios that arise where attorneys’ fees have been challenged as improper in a real estate closings are as follows:

Fla. Bar. Ethics Opinion 63-21 Bank Forces “Borrower” to Pay Bank’s Legal Fees.  A bank, which furnishes a mortgage in connection with a matter … MAY require the borrower to bear the resulting legal fee as a condition of the loan. It is not improper for the bank’s attorney to insist upon a fee for the service rendered the bank even though the work of the attorneys involved in the matter may be duplicated on behalf of their respective client.

Fla. Bar. Ethics Opinion 87-8   Bank Forces “Borrower” To Pay Legal Fees, Limited to Bank’s Actual Cost.  A bank MAY require borrowers to reimburse the bank for the actual cost to the bank of salaried in-house counsel’s services in connection with closings of loan transactions and may pay in-house counsel a bonus based on such charges to borrowers.

Fla. Bar. Ethics Opinion 64-56  Mortgage Company Forces “Seller” to Pay “Borrower’s” Legal Fees.  Mortgage company’s attorney CANNOT charge Seller an attorney’s fee in the absence of any agreement between the attorney and Seller. HOWEVER … the attorney MAY collect a reasonable fee for his services provided Seller has agreed with Buyer to pay all closing costs and providing the fee is part of the closing cost.

Fla. Bar. Ethics Opinion 69-39               Mortgage Company Forces “Seller” to Pay “Borrower’s” Legal Fees.   Mortgage company MAY requiring those borrowing or receiving funds from it to bear or contribute to the payment of the fee of the attorney employed by it or to other expenses; HOWEVER, if such expenses are to be charged to a party other than the borrower (e.g. if the charges in connection with obtaining the loan are going to be charged to the Seller), such parties should be at liberty to decline to bear such expense and to insist upon some other agreement with the buyer.

Fla. Bar. Ethics Opinion 75-6        Shifting Fees To Other Side, Generally.  No impropriety in arrangements that shift to a purchaser or borrower part or all of a seller’s or lender’s attorney’s fees and other costs.

Fla. Bar. Ethics Opinion 76-36     Attorney Gets Discounted Insurance Rate.  Where an attorney orders title insurance from a commercial company at a discounted rate from that charged the general public, the attorney CANNOT charge his client at the rate charged the general public without disclosing the attorney’s actual cost to the client.

Fla. Bar. Ethics Opinion 65-34  Seller’s Attorney who Prepares All Docs Charging The Buyer Attorney Fees. A seller’s attorney who prepares all of the documents used in a real estate transaction CANNOT present a statement to the buyer for a portion of the attorney’s fee for these services when the buyer did not employ the attorney or agree to pay him a fee.

Fla. Bar. Ethics Opinion 76-36                 Distinction between Attorney Fees for Services and charging for Title Insurance – SCENARIO #1.  An attorney, on the real estate closing statement, CANNOT list the cost for title insurance at the rate charged the general public without disclosing the attorney’s actual cost.

Fla. Bar. Ethics Opinion 70-49               Distinction between Attorney Fees for Services and charging for Title Insurance – SCENARIO #2.   It was the duty of the Florida attorney to obtain the title insurance at the lowest applicable premium and where a rebate is received, the saving should be passed on to the client.

Fla. Bar. Ethics Opinion 61-60               Distinction between Attorney Fees for Services and charging for Title Insurance – SCENARIO #3.  Where the lawyer simply charged a blanket fee and then provided the title insurance policy at his own cost out of his fee, no duty rested on him to inform his client of his interest in the Fund. A distinction appears where the title insurance is sold and a portion of the fee retained —in which case it is incumbent on the lawyer to make a disclosure to his client — and where the title insurance is furnished as an additional protection to the client without any additional charge therefore.

Fla. Bar. Ethics Opinion 75-6        Condo Developer’s Attorney Charging FULL Title Insurance Premium, When Disclosure Must be Made.  A purchaser pays the same amount for the title insurance regardless of where the premium goes. Attorney for a condominium developer MAY properly retain as part or all of his fee for representing the developer the part of the title insurance premium the lawyer retains as agent provided that disclosure of that fact is made to the purchaser.   We believe that the disclosure should be made at a time and in a manner that gives the purchaser a choice and not at the closing after the purchase agreement has been signed, presumably a deposit made and title insurance already obtained.

HOA AND CONDO ESTOPPEL CERTIFICATES

While not a title insurance charge, it is a hidden profit center which title companies could potentially upcharge; so what should estoppel fees cost?

  • If estoppel certificate is sent within 10 business days charge =         $250.00
  • If estoppel certificate is sent within 10 business days charge =         $350.00
  • If Owner is Delinquent (even if by a 0.01 penny) ADD =   +$150.00 
  • Updates if requested prior to original estoppel certificate expiring = One (1) FREE

“An estoppel certificate that is hand delivered or sent by electronic means has a 30-day effective period. An estoppel certificate that is sent by regular mail has a 35-day effective period.  If additional information or a mistake related to the estoppel certificate becomes known to the association within the effective period, an amended estoppel certificate may be delivered and becomes effective if a sale or refinancing of the parcel has not been completed during the effective period. A fee may not be charged for an amended estoppel certificate. An amended estoppel certificate must be delivered on the date of issuance, and a new 30-day or 35-day effective period begins on such date.”

“If the certificate is requested in conjunction with the sale or mortgage of a parcel but the closing does not occur and no later than 30 days after the closing date for which the certificate was sought the preparer receives a written request, accompanied by reasonable documentation, that the sale did not occur from a payor that is not the parcel owner, the fee shall be refunded to that payor within 30 days after receipt of the request.”

See, Fla. Stat. §720.30851 (for HOAs) and  Fla. Stat. §718.116 (For Condos) and Fla. Stat. §719.108 (Co-ops)

So What Can a Title Insurance Company Charge? 

Essentially, there are only three (3) types of fees that title insurance companies may charge.  Title insurance companies may charge for: (A) the “Title Search,” (B) “Closing Services” often called a Settlement Fee; and (C) a “Title Insurance Premium.”   

  1. Title Search means the compiling of title information from official or public records.  See, Fla. Stat. §627.7711(1)(b), (4).  The title search provides a summary listing of all of the past recorded documents affecting title to the land being purchased.  Our fee for this is the cost charged to us by our underwriter which is $135.00.  Many title companies inflate this amount to $200.00, $250.00, or $300.00 because consumers have no idea what our true cost is.
  • B. Closing Services (also known as a “Settlement Fee” in the industry) are essentially services for actually doing the closing and include:
  • Services performed in the agency’s capacity including, but not limited to,
  • Preparing documents necessary to close the transaction,
  • Conducting the closing, and
  • Handling the disbursing of funds. See, Fla. Stat. §627.7711(1)(a)
  • C. Title Insurance Premium is the price set in the charts below by the State of Florida (technically by Florida’s Financial Services Commission) see, Fla. Stat. §624.05(2), for the title insurance policy See, Fla. Stat. §627.7711(2). 

Most violations on what title companies can charge occur in what should already be included in this bucket (i.e. what services the Title Insurance Premium already covers).  The reason is because it’s counter-intuitive to think, but the “title insurance premium” covers much more than just the price of the insurance policy. It bundles in a lot of services that the title company is already required to provide, and which they are not allowed to separately charge.  The title insurance premium includes “primary title services” (defined above) see, Fla. Stat. §627.7711(1)(b), (2); and, My Florida CFO’S Frequently Asked Questions, which knocks out a lot of the additional charges that a title company can separately charge. 

It is for this reason the safer practice is for title companies to simply put the fees that they want to charge inside of their settlement fee (i.e. the Closing Service fee which title companies are allowed to charge), instead of breaking out multiple line items for additional unauthorized fees.   

Our website provides a Title Insurance Calculator to determine the price of a title insurance policy in Florida.  There really is no magic to it because Florida Title Insurance Companies are required to charge the promulgated rate.[23]   The price of the insurance policy is based upon a promulgated rate and can be easily calculated by simply using the charts below. See, Fla. Admin Code. 69O-186.003.

Original Owner’s Policy — Premium Shall Be:

 Per ThousandMinimum Insurer Retention
From $0 to $100,000 of liability written$5.7530%
From $100,000 to $1 million, add$5.0030%
Over $1 million to and up to $5 million, add$2.5035%
Over $5 million and up to $10 million, add$2.2540%
Over $10 million, add$2.0040%

Original Mortgage/Lender’s Policy — Premium Shall Be:[24]

 Per ThousandMinimum Insurer Retention
From $0 to $100,000 of liability written$5.7530%
From $100,000 to $1 million, add$5.0030%
Over $1 million and up to $5 million, add$2.5035%
Over $5 million and up to $10 million, add$2.2540%
Over $10 million, add$2.0040%

Reissue Rates

(i.e. When Seller has an insurance policy less than 3 years old)

Reissue Premium for Owner’s & Mortgage/Lender’s Policy shall be:

 Per Thousand
Up to $100,000 of liability written$3.30
Over $100,000 and up to $1 million, add$3.00
Over $1 million and up to $10 million, add$2.00
Over $10 million, add$1.50

WARNING: If you sign an agreement with a title company stipulating to high-priced, fee-laden escrow and miscellaneous charges, then you may have agreed to the title company’s “additional” fees, and may not be able to renegotiate.  However, as cited in the footnotes some of those waivers and agreements that title companies ask consumers to sign may be invalid and unenforceable by the title company.[25]  

DISCLAIMER:  Topics discussed are general concepts, not intended to constitute legal advice, accuracy, nor completeness, and may not be relied upon as such; consult an attorney or accountant.  The author Randy Gilbert, J.D. is neither an attorney nor an accountant.  FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.” ®

[1]  Accord., Rohit Chopra, CFPB Director

[2] See, My Florida CFO’S Frequently Asked Questions, Title Closings, Question #3.  … In many closings, the lender will require certain debts of the buyer to be satisfied as part of the loan process. In order for the title agency to disburse these funds from the escrow account within the payoff deadline, it may be necessary to send the payments to each creditor using a wire transfer, overnight or express mail services. While these payoffs are being disbursed from the escrow account, the primary purpose of the payments is to satisfy a lender requirement not a title insurance requirement. The department would not object to separate charges being made to the buyer for this service, as long as the agency did not add an amount to the charges from the provider of these services. The department would expect these charges to be recorded in the sections identified by the CFPB for the proper completion of their Closing Disclosure form.”

[3] My Florida CFO’S Frequently Asked Questions, Title Agency, Question #6.  “Examples of fees that should not be listed as separate line items on the form include, but are not limited to: Postage and handling, Notary services, Copies, Digital documents, Document preparation fees, Document storage or warehousing fees, Electronic conversion of documents to CD or DVD formats.   Agencies that charge additional fees as separate line items may be found to be engaging in deceptive practices against Florida consumers in violation of the Florida Statutes.”

My Florida CFO’S Frequently Asked Questions, Title Closings, Question #3.   “Can I charge a separate fee for postage, mailing, or overnight shipping?  The Florida Statutes defines “closing services” [i.e. the Settlement Fee] as including preparing the documents and conducting the closing. Therefore, any charges related to these functions should be included in the agency’s closing services fee. The definition of “primary title services” includes performing the steps necessary to issue the title insurance policy. The insurer’s liability for the gap period does not end until the proper documents are recorded in the county where the property is located. Therefore, the expense incurred by the agency to get these documents should be included in that agency’s share of the title insurance premium.

[4] See, Fn. #3.

[5] “The title insurer or its agent or agency must maintain a record of the actual premium charged for issuance of the policy and any endorsements in its files for a period of not less than 7 years. The title insurer, agent, or agency must produce the record at its office upon demand of the office.” Fla. Stat. 627.7845(3)

“The licensee shall keep and make available to the department or office books, accounts, and records as will enable the department or office to determine whether such licensee is complying with the provisions of this code. Every licensee shall preserve books, accounts, and records pertaining to a premium payment for at least 3 years after payment; provided, however, the preservation of records by computer or photographic reproductions or records in photographic form shall constitute compliance with this requirement. All other records shall be maintained in accordance with s. 626.748. The 3-year requirement shall not apply to insurance binders when no policy is ultimately issued and no premium is collected.”  Fla. Stat. 626.561(2), See also, My Florida CFO’S Frequently Asked Questions, Agency Licensing and Compliance, Question #20. 

“Every agent transacting any insurance policy must maintain in his or her office, or have readily accessible by electronic or photographic means, for a period of at least 5 years after policy expiration, such records of policies transacted by him or her as to enable the policyholders and department to obtain all necessary information, including daily reports, applications, change endorsements, or documents signed or initialed by the insured concerning such policies.” Fla. Stat. §626.748, See also, My Florida CFO’S Frequently Asked Questions, Agency Licensing and Compliance, Question #20.

[6] See, Fn. #3.

[7] See, Fn. #3.

[8] See, Fn. #3.

[9] See, Fn. #3.

[10] See, Fn. #3.

[11] See, Fn. #3.

[12] See, Fn. #3.

[13] See, Fn. #3.

[14]  “The fee of a notary public may not exceed $10 for any one notarial act under this part, except as provided in s. 117.045 [regarding marriages] or s. 117.275 [regarding remote online notaries].”  Fla. Stat. §117.05(2)(a).  “An online notary public or the employer of such online notary public may charge a fee, not to exceed $25, for performing an online notarial act under this part. Fees for services other than notarial acts, including the services of a RON service provider, are not governed by this section. A RON service provider’s services are also not considered closing services, as defined in s. 627.7711, and a fee for those services may be separately charged.”  Fla. Stat. §117.275.  “The Governor may suspend a notary public for …. (i) Charging fees in excess of fees authorized….” Fla. Stat §117.01(4)(i).

[15] This service would need to be performed as part of a closing. The fee would be redundant and should be included as part of the “Closing Services.”  See, Fla. Stat. §627.7711(1)(a).

[16] See, Fn. #15.

[17]  “An outside notary can assist a title agency with performing a closing  However, this would be an expense of the title agency and not an expense of the closing file. The cost for this service should be calculated in the closing services fee recorded on line 1100 of the settlement statement form. The notary service is conducting the closing which is clearly defined in Florida Statute s. 627.7711(1)(a) as being part of the closing services. By hiring an outside vendor to assist your title agency, you are assuming the responsibility for that vendor as if they were your employee. The title agency will be held responsible for the closing transaction performed by the outside vendor.”  My Florida CFO’S Frequently Asked Questions, Title Agency, Question #7.

[18] See, Fn. #15.

[19] See, what is included in “primary title services” for which extra fees may not be separately charged.  See, Fla. Stat. §627.7711(1)(b), (2)

[20] See, Fn. #19

[21] See, Fn. #19.

[22] According to the Department of Financial Services, Frequently Asked Questions,  Escrow funds are received by an agency in a fiduciary capacity. All funds must be properly accounted and paid to appropriate party. Failing to disburse any amount from the escrow fund is a violation.  Florida Statutes §626.8473(4) states, “Funds required to be maintained in escrow trust accounts pursuant to this section shall not be subject to any debts of the title insurance agent and shall be used only in accordance with the terms of the individual, escrow, settlement, or closing instructions under which the funds were accepted.”  Furthermore, according to the Department,

“The title insurance agent or agency is not the owner of these funds. A title insurance agent, title insurance agency or a title insurer is entitled to receive only the amounts listed on the settlement statement form for the services or products that entity provided. Anyone that retains any portion of a fee that the consumer overpaid must refund that overage immediately. The Department of Financial Services does not recognize any waiver of the provisions of the Florida Statutes that relate to funds held in escrow and/or disbursed from escrow by a licensee.  A title insurance agent or agency must immediately return any amounts that are due to the consumer, regardless of the amount.”  My Florida CFO’S Frequently Asked Questions, Title Escrow Accounts, Question #6, #7.

[23] Title Insurance companies are allowed to then offer the purchaser of the title insurance a rebate.  “To assure proper credit to the appropriate party, any rebate of the agent’s share of the premium should be noted on the Closing Disclosure form on any line not assigned to another topic. It is important to note Florida Statutes s. 627.780 requires licensees to “quote, charge, accept, collect or receive” only the promulgated rate (premium), which should be recorded on the Closing Disclosure form in the proper area as defined by the Consumer Financial Protection Bureau (CFPB).”  See, My Florida CFO’S Frequently Asked Questions, Title Closings, Question #5.

[24] “Simultaneous Issue Rates. … When an owner’s and a mortgagee’s policy or policies covering identical land are to be issued simultaneously the risk premiums applicable for the owner’s policy shall be the regular owner’s rate as provided for herein. The rate for the mortgage policy or policies so simultaneously issued will be a minimum $25.00 for an amount of insurance not in excess of the owner’s policy. The risk premium on the amount of the mortgage policy or policies in excess of the owner’s policy shall be figured at the regular original title insurance rates for mortgage policies.”  Fla. Admin Code. 69O-186.003(5).

[25] See, Fn. #22.

iBuyers vs. Real Estate Agents

Posted on by Randy Gilbert

What is an iBuyer?   A novel and innovative tool in real estate has flipped the script by providing sellers a platform, not to list their home for a certain price, but instead to ask, “How about you make-me-an offer?”  iBuyers (short for “Instant Buyer”) are web-based real estate companies which allow sellers to offer their home for sale online directly to the web based iBuyer.  The seller simply plugs in their address, answers some questions about the home’s condition, finishes, and upgrades, uploads a walkthrough video taken on the homeowner’s cell phone.  Then, using the iBuyer’s computer generated algorithms, the iBuyer generates a near instant no obligation cash offer to purchase the seller’s home.

iBuyer vs. Flippers. Flippers typically find properties needing lots of work, buy low, renovate them, and then resell.  Contrast, an iBuyer, which buys properties in relatively new and good shape that are close to market ready, usually make minor repairs, resell, and make their profit from fees they charge to sellers.

What Type of Sellers are iBuyers Looking For?  As stated, these companies use computer algorithms so they are looking for uniformity and predictability.  So the most attractive properties to an iBuyer will be single family homes, newish, not custom or unique, something predictable, on a standard lot, which are move in ready, and require minimal to no work.

Market Penetration.  I buying is relatively new.  iBuyers accounted for 0.36% of U.S. homes in 2021’s Q1 and tripled to 1.6% of U.S. homes (i.e. 28,000) bought in 2021’s Q3.

iBuyer Benefits.  Many owners consider the traditional home-selling process long and fraught with inconvenience.  Selling to an iBuyer appeals to homeowners wanting to: sell quickly and conveniently, to a financially solid iBuyer for cash.  No need to worry whether a potential buyer will qualify or not for a mortgage.  iBuyers generally do not re-negotiate, cancel, or default.  Additionally, sellers can avoid the usual pains of staging or tidying their homes, and having to leave with their dogs and children while caravans of potential buyers trapse through for showings.

iBuyer Cons.  Sellers looking for speed and certainty will pay for the fast-pay-day convenience iBuyers offer by netting less money.  There are typically higher fees charged than compared to using a listing real estate agent.  Especially now in a competitive market sellers will likely receive less than fair market value because properties are selling for asking price.  There is no real way to negotiate the offer with the iBuyer.  Customers have reported that iBuyers tack on inflated repair costs which dramatically reduce the real offer being made by the iBuyer.  Lastly, the algorithms and quick purchases may be incorrectly and artificially manipulating market prices.  That claim has been refuted based on iBuyers only occupying a small market share; however others disagree arguing, iBuyers may act as market influencers by buying large pockets or properties and then inflating the price in particular neighborhoods.

iBuyer Service Fees.  iBuyers charge different convenience fees but they seem to range from 5-13% of the value of the seller’s home. Additionally, the seller may also have to pay for closing costs (1-3%) and repairs (1-2%).  iBuyers also make money by reselling the home for more than they paid and may also sell a potential seller’s contact information as leads.

Top iBuyers in the Key Market.  Opendoor and Offerpad, based on real estate transaction volume, are the largest.  Opendoor reported buying 15,181 and selling 5,988 homes in 2021’s Q3.  Offerpad reported buying 2,753 selling 1,673 homes in the same period.  Other iBuyer companies include: RedfinNow (which allows the seller to rent back for up to 60 days after closing), Orchard, Sundae, Keller Offers (in Northern Florida), and WeBuyUglyHouses.  Zillow Offers which launched in 2018, was one of the biggest iBuyers; but on November 2nd, 2021,  it shut down its iBuyer operation and cut 25% of its workforce, attributing hundreds of millions of dollars in losses to “unpredictability in forecasting home prices,” faulty algorithms, and supply shortages to make repairs.

Using Real Estate Agents with an iBuyer.  Real estate agents will be paid commissions for procuring buyers for a property being resold by an iBuyer, but the Commission may be as little as 1%, depending on the iBuyer.  Realtors acting as listing agents will also be paid a commission if they procure an iBuyer for their sellers.  Some iBuyers allow Realtors to show their homes to potential buyers using a text-to-enter system.  Offers to purchase an iBuyer home are submitted through iBuyers’ internal portals.  One iBuyer suggests realtors representing sellers request an offer from the iBuyer before listing that Seller’s property on the MLS in order to get a more competitive price, but that sounds counter-intuitive.

Online Estimate vs. Actual Offer.   It’s one thing to play online and get an estimate of your home’s value; but quite another thing to receive an iBuyer’s actual purchase offer making those estimates real.

Using iBuyers as a Tool to Set a Pricing Floor.  For homeowners selling their property, even if they ultimately decide not to use an iBuyer to buy their homes, and instead opt to use the traditional method of listing with a realtor, getting an iBuyer’s offer is not a bad idea, because it can establish a baseline asking price.

Rip Off-er or Fair Market Value (FMV)?.   One report indicated that in 2019 iBuyers paid about 98.5% of FMV and then in 2021 some iBuyers paid over FMV. In large part however, iBuyers often pay less than buyers listing conventionally with a realtor; but  not much less.  The question is whether iBuyers are worth the financial trade-off for a quick sale and convenience of not opening the house to a parade of strangers.

Realtor vs. iBuyer.   If sellers have the time, then realtors are the better option to net the most.  Buying and selling real estate is still a very people centric profession.  Homeowners and homebuyers need experts whom have localized knowledge in their field, have honed their craft, and understand the relevant real estate market, communities, and metrics.  A real estate agent should be able to navigate the mechanics of a real estate transaction, guide parties, mitigates problems, and in the-long-run bring a better result to the consumer.

DISCLAIMER:  Topics discussed are general concepts, not intended to constitute legal advice, accuracy, nor completeness, and may not be relied upon as such; consult an attorney or accountant.  The author Randy Gilbert, J.D. is neither an attorney nor an accountant.  FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.” ®

Summarized – 2022’s Real Estate Experts Market Predictions

Posted on by Randy Gilbert

On the Rise.  In 2022, Housing prices, rents, mortgage rates, home sales, and income / wages / salary / paychecks are all expected to rise.  2022 will hit the 2nd highest sales level in 15 years, defeated only by 2021.

Inventory will increase, but not enough.  Inventory will rise only 0.30%.   Homes are expected to continue to sell quickly, meaning buyers still need to make quick decisions to win offers.

Where to find sellers who can sell.  Sellers most poised to take advantage of this hot seller’s market, are sellers who do not need to buy a replacement house immediately; for example, heirs/beneficiaries of real estate, second homes, vacation homes. 

Home Price Appreciation continues but slows.  Home appreciation relates to house or investment property increasing in value over a period of time.  In 2021, Florida homes appreciated by 14.00%. In 2022, home values will continue to appreciate but slowly. Predictions from Fannie Mae estimate appreciation (+7%), NAR estimates appreciation (+2.2%).

Mortgage Rates will Rise slightly due to inflation.   The Consumer Price Index (CPI) measures changes in price of goods and services.  Inflation is when prices for the same goods and services begin to increase.  So when inflation rises, so does interest rates. Why?  Because the cost of money today for the loan you are borrowing is going to be worth less to the bank when it is repaid sometime in the future.  In 2022, rates are projected to rise to 3.60 – 3.70% but not to worry, because historically speaking when looking at the last 50 years, rates will still be considered very very low.  To get an idea, last year’s average monthly rate from January through December for a 30-year-fixed-rate-mortgage looked like: (2.74 -> 2.81 -> 3.08 -> 3.06 -> 2.96 -> 2.98 -> 2.87 -> 2.84 -> 2.90 -> 3.07 -> 3.14 -> 3.20%).

Why Buy Now?  (1) Sales prices have increased year-after-year sine 2012 (i.e. for a decade!) and will continue to increase but moderately (2.9%).   That may not sound like a lot but on a 500,000 house that’s about $15K.  (2)  Declining unemployment and increased wages means more home buyers entering the market; (3) As people become more social and comfortable, they will return to buying in condos and cities; (4) 45 Million millennial (ages 26-35) first-time-home-buyers are entering the housing market. (5) Because of the competitive labor market, smart recruiters will allow (or tolerate) remote working.  Remote workers who previously could not afford new housing, can now expand their home search options practically limitlessly now that commuting is not a factor. (6) International buyers are allowed to travel to the U.S. if they:

(7) Federal moratorium on residential evictions was lifted on July 2021; and (8) Federal moratorium on residential foreclosures ended September 2021.  The foreclosure process will have a delayed kick-off since banks first need to send out a 30 day “Notice of Acceleration” letter, and then upon failure to pay, the bank can sue to foreclose.  Evictions and foreclosures will increase supply.  Foreclosures are also a matter of public record, so bargain hunters will be jockeying to buy.

Factors hurting housing sales:  (1) Affordability to buy remain a problem. (2) Not enough homes.  Home supply is 4 Million short from buyer demands. accord., Freddie Mac.  (3) Many homebuilders went out of business after the 2008 housing crash, leading to a historic housing shortage; (4) Investors are jockeying to snap up homes as the tight supply keeps pushing prices higher.  (5) 28% of homeowners choose not to sell because they can’t find a new home to buy.

Rentals and investments.  Rental vacancies are at historic lows (5.7%-6.8%). Rents grew 30% in 2020.  Rental prices will continue to increase because, home prices continue to rise and those who cannot afford to buy will continue to rent.  Alternative options are move back in with family.  Rising rents will continue to entice investors to buy income producing property.  Investment sales will increase 3.6% in Dade and Broward in 2022.

Sources for this story include: Realtor.com, Redfin.com, HousingWire.com, and Fortune.com.

DISCLAIMER:  Topics discussed are general concepts, not intended to constitute legal advice, accuracy, nor completeness, and may not be relied upon as such; consult an attorney or accountant.  The author Randy Gilbert, J.D. is neither an attorney nor an accountant.  FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.” ®

Real Estate Closings Afterhours And on Weekends – Real Time Payments (RTP®)

Posted on by Randy Gilbert

Consumer Expectations.   It starts with the consumer experience.  We all want things to happen as quickly, easily, and securely as humanly possible.  Think back 10 years ago, and you were perfectly happy receiving a package within five (5) business days.  Nowadays, we have amazon prime promising same or next day delivery coupled with Uber Eats, Domino’s, Lyft, UPS and others’ real time tracking.  So, What do we want?  “EVERYTHING!”  And When do we want it?  “NOW!”  With sending and receiving payment it is no different.  Real Time Payments (RTP®) focus on curing cash lag.

What are Real Time Payments (RTP®)?  Global financial banking is robust, large, fast, and effective so how are RTPs additive?  Imagine no blackout times to make or receive a payment.  RTPs are a new way to transfer funds instantaneously anywhere, anytime, including weekends, afterhours, and legal holidays.  RTPs are the first new banking clearinghouse in the U.S. since the 1970s (i.e. over 40 years).  RTPs compliment other types of electronic payments such as ACH, card, and mobile but are distinguishable in that: (1) the payment settles instantly; (2) are final and irrevocable and cannot be clawed back or recovered after sending; and (3) can be sent 24 hours / 7 days a week / 365 days a year, even when other payment options are unavailable.

Availability of RTPs Locally and Internationally?  Despite their mystique in the U.S., RTPs are nothing new.  RTPs have existed in Europe for over fifteen (15) years.  Asia’s RTP market boomed through the pandemic.  Today, there are 56 countries utilizing RTPs with: India conducting over twenty five (25) Billion; China sixteen (16) Billion; and the UK three (3) Billion in annual RTP transactions.  As e-commerce, the global marketplace, and the gig economy (i.e. freelance work or short term labor contracts) grow, demands for RTP is forecast to escalate everywhere.  Banks have made RTPs a top priority for implementation.

Benefits of RTPs?  RTP is designed for both sending and receiving funds to both companies and individuals.  Because of immediate 24/7/365 availability and instantaneous settlement of funds, RTPS are perfect for: Emergency or time sensitive payments (e.g. real estate closings, stopping per diem interest from accruing); Customer billing; Paying vendors or suppliers; E-commerce for online payments, Employees for payroll; and anyone else who expects instant payment for labor, services, or goods delivered.  Parties to the transaction will be able to see where the money is every stage of the way.  Within fifteen (15) seconds, payment confirmation will be received showing whether the transmission was successful or failed. Additionally, for added security, prior to setting up an RTP account, the banks themselves will require some identity proofing of the account holder.

Limitations on RTPs and Workarounds.  $100,000.00 is the current maximum that can be sent at one time.  In some rural areas that may be useful for closing a real estate transaction, but not so much in South Florida.  The work around is that multiple and successive RTPs can be sent.  In as much as the cap can easily be circumvented, there are talks about raising the ceiling to $1 Million for a single transfer.  In the meantime, RTPs can be readily used in real estate transactions by: allowing buyers to make Earnest Money Deposits, or by having title and escrow companies pay disbursements that fall below the $100,000.00 cap.  Moreover, just like wires, there will also be a banking charge for RTPs.  While not a rule, consumers who send RTPs tend not to be charged, with the cost of the RFP being born by the party requesting payment.

What platform is used for RTPs?  RTP messages and data use the ISO 20022 format (first introduced in 2004).  Banks and financial institutions globally are set to transition their payment systems from using SWIFT messages to the highly structured and data-rich ISO 20022 standard.  ISO is the language and model for relaying electronic messages regarding payments between financial institutions.  In techy talk, it gives the financial industry a common platform for sending payments messages and exchanging payments data, using a central dictionary, a standard modelling methodology, and a series of Extensible Markup Language (XML) and Abstract Syntax Notation (ASN.1 ) protocols.  The payment itself carries reference details and unique identifiers for any inquires that arise.

Requests For Payment (RFP) – i.e. sending an electronic bill or invoice.  Billers can send RFPs (requests for payment) to customers or debtors.  Customers or debtors can respond to RFPs from billers (e.g. your bill for $100.00 is due).  In other parts of the world, RFPs are called Requests To Pay.  Because the ISO 20022 platform can retain a substantial amount of data, RFPs can even attach actual documents like the bills or invoices.   The payment received in response to an RFP will include the reference info from the original RFP.

What Additional Information Can Be Sent in RTPs?  RTPs enhance the free flow of information through real time initiation, confirmation, and messaging at every step.  There are three (3) types of non-financial information that can be used.  The Request for Information (RFI) allows the payee to ask for more details about the payment (e.g. I received your payment, What is it for?).  A “Remittance Advice,” can be attached to a payment which can include up to 4000 characters (about 650 words) for invoice numbers and payment details (e.g. like the memo section when sending a wire or check).  “Payment Acknowledgment” from the payee acknowledging their receipt of funds (e.g. Thanks for the payment, it has been posted to your account!).

Preparing your business for RTPs.  On the banking side you will want to update your system to accept the new BAI codes for real time payments.  BAI stands for Bank Administration Institute, and is a file format used by banks to transfer financial data.  These codes have been published to ensure consistency amongst all US banks handling RTPs.  Review and toggle your alert and notification settings for RTPs.  Since RTPs are available 24/7 figure out how you will be responding to payments received after hours, nights, and weekend.  Clarify who has the authority to initiate and then approve RTPs because once the payment is sent it is final and irrevocable.

RTP vs ACH Unlike an ACH debit, with an RTP the biller does not initiate the pulling of funds out of a customer’s account; so there is no risk of returns or other types of rejections once payment is sent by the customer.  In other words, if FPL did an ACH debit it would be up to FPL to prove that the payment was duly authorized by the payor.  Additionally, ACHs are a domestic form of payment in the U.S. and cannot be done internationally.

Can RTPs Enhance Your Real Estate Closings.  Not currently but hopefully soon. There are three (3) ways RTPs could expedite the closing process.  Using RTPs: Buyers could pay their earnest money deposit to the title company; Buyers or Lenders could send the title company funds needed to close; and title companies could make all the necessary disbursements to the appropriate payees in real time. Unfortunately, despite RTPs availability, until banking policies change RTPs are just out-of-reach for the real estate market. According to Bank of America, their Real Time Payments platform unavailable in their Small Business Banking space (i.e. businesses with annual revenues under $10 Million, which pretty much rules out just about every title company). Moreover, according to BOA, RTPs are also not currently available for third party funds accounts such as an IOLTA or Trust account, which are the escrow accounts title companies use to fund.

Conclusion.  With digital closings coming onboard to simplify and expedite real estate transactions, there is a concomitant need for digital funds to pay for it all.  Everyone wants to be able to pay and do things simpler, easier, and safer.  The way consumers are paying have changed and RTPs are the future.

DISCLAIMER:  Topics discussed are general concepts, not intended to constitute legal advice, accuracy, nor completeness, and may not be relied upon as such; consult an attorney or accountant.  The author Randy Gilbert, J.D. is neither an attorney nor an accountant.  FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.” ®

Real Estate’s 2021 Legislative Changes and Updates

Posted on by Randy Gilbert

Fla. Stat. §119.07 – Inspecting Public Records   Prohibits an agency receiving a public record request from responding to the request by filing an action for declaratory relief against the requester to determine whether that record meets the definition of a public record or if it is confidential or exempt.

Fla. Stat. §125.69 – Code Inspectors – No Investigating Anonymous Complaints.  Code inspector may not investigate potential code or ordinance violations based on anonymous complaints. Complainant must provide their name and address.  Exception, if code inspector has reason to believe violation presents imminent threat to public health, safety, or welfare or imminent destruction of habitat or sensitive resources.

Fla. Stat. §212.031 – Rent Tax On Real Estate Reduced.  Reduces tax rate on rental of commercial real property from 5.5% to 2.0% beginning the second month after the Unemployment Compensation Trust Fund exceeds a balance of $4.07 billion.

Fla. Stat. §212.0596 – Sales Tax on Out-Of-State Retailers.  Out-of-state retailers and marketplace providers with no physical presence in Florida must collect Florida’s sales tax on sales of taxable items delivered to purchasers in Florida if their remote sales exceeded $100,000. Authorizes additional lead-acid battery fee, and waste tire fee.

Fla. Stat. §489.147 – Contractor Prohibited Property Insurance Practices.  Contractors cannot: encourage, instruct, induce, solicit, residential owner to contact a contractor or public adjuster to make a roof insurance claim; offer to waive any insurance deductible or give a thing of value in exchange for being allowed to make a roof insurance claim; accept kickbacks for property insurance claims; interpret insurance policies, advise insureds about their coverage or duties, or adjust property insurance claims; provide insureds with contracts without a good faith estimate of the itemized and detailed cost of services and materials for repairs undertaken.

Fla. Stat. §501.059 – Private Cause Of Action for Telephone Solicitations.  All sales telephone calls, text messages, direct-to-voicemail transmissions, recorded message, using an automated machine to dial must have recipients prior express written consent. Creates private cause of action for $500 or actual damages if more, which may be trebled (3x) by the court.

Fla. Stat. §501.616 – Telephone – Blocking Caller ID, Creating False Phone Number.  No salesperson may prevent transmission of their name or telephone number, or use technology to display a different caller identification number.

Fla. Stat. §501.616 – Telephone Solicitations time frames and limitation on amount of calls. No salesperson may call or send a recorded message outside 8AM-8PM, nor more than three (3) times over 24 hours on the same subject matter.  

Fla. Stat. §626.854(15) – Contractor Prohibition as Public Adjuster or Recommending Public Adjusters.   Contractors and their subs may not advertise, solicit, offer to handle, handle, or perform public adjuster services unless licensed as a public adjuster.  They can recommend a consumer contact their own insurance company.

Fla. Stat. §626.854(22) – Public Adjuster Prohibitions Relating To Roofs.  Offering residential owner rebates, anything of value in exchange for being allowed to: (a) conduct a roof inspection; or (b) Make a roof insurance claim.  Offering or accepting any compensation, inducement, or reward for the referral of roof insurance claims.

Fla. Stat. §715.12 – Construction Contract Prompt Payment Law. Increases late payment interest on construction contracts to the rate specified in §55.03, plus twelve percent (12.00%) per annum.

Fla. Stat. §718.111 Condo – $150.00 Transfer Fee.  Increases fee condo may charge for transfer of a unit from $100.00 to $150.00.

Fla. Stat. §718.111 Condo – Renter Right To Inspect.   Allows renters to inspect and copy Declaration of Condo, bylaws, and rules.

Fla. Stat. §718.113 Condo – Unit Owners Right to install Charging Stations.   Permits unit owners with their own designated parking spot to install charging stations for electric or a natural gas fuel vehicle.

Fla. Stat. §718.121 – Condos, Form Of Notice, Prerequisites To Claiming Attorney Fees, Increasing Time To Pay Before Liening. Condos may send invoices and statements via email but only if condo unit owner affirmatively opts in.  Unit owners are entitled to a “Notice of Late Assessment” (on a statutorily prescribed form) stating the amount owed to the Condo before attorney fees may be charged attorney fees.  The “Notice of Late Assessment” must specify the amount owed and allow the owner to pay past due assessments without paying additional attorney fees.  With regards to Condos sending a “NOTICE OF INTENT TO RECORD A CLAIM OF LIEN,” the period of time a unit owner has to pay a monetary obligation after receiving the Condo’s notice is increased from 30 days to 45 days (this now conforms to the 45-day payment period afforded parcel owners in HOAs).

Fla. Stat. §718.202 Condo Developer – Limitation On Use Of Buyer’s Escrowed Funds.   Condo developer may spend escrowed funds on actual costs of construction and development; not marketing, loan, professional, or insurance costs.

Fla. Stat. §720.303 HOA – Guest List Confidentiality.  Information an HOA obtains in a gated community in connection with guests’ visits are not accessible to members or owners.

Fla. Stat. §720.306 HOA – Restrictions On Rentals.  HOA may amend HOA docs to prohibit or regulate rentals of 6 months or less.  May prohibit more than 3 rentals per year.  Inapplicability when 15 or fewer parcels.

Fla. Stat. §732.507 – Effect of Divorce on a Will.  Provision in a will affecting a decedent’s spouse are void upon divorce.  Exception, if the will is executed after the divorce, contrary intention in the will is specifically stated, or the divorce judgment provides otherwise.

Fla. Stat. §768.38 Liability Protections for COVID-19-related Claims.  Makes claims against individuals, businesses, educational institutions, governments and religious institutions very difficult. Civil actions based on COVID-19 must meet the following requirements: (a) The complaint must be pled with particularity; (b) be accompanied by a Florida physician’s affidavit attesting that the plaintiff’s COVID-19 injuries occurred as a result of the defendant’s acts or omissions; (c) generally be commenced within 1 year after the cause of action accrued; (d) Court must then conduct a hearing to determine compliance with the foregoing or dismiss the action without prejudice; (e) Court must also determine whether the defendant made a good faith effort to substantially comply with authoritative or controlling government issued health standards.  If the court determines defendant made a good faith effort, the defendant is immune from civil liability.  If the court determines the defendant did not make such a good faith effort, the plaintiff may continue with their suit but must prove by clear and convincing evidence that the defendant acted with gross negligence.  Different standard applies to health care providers.

Fla. Stat. §823.14 – Florida Right to Farm Act. Limits nuisance claims (e.g. noise, smoke, odors, dust, fumes, particle emissions, or vibration) against farm operations to real estate owners within ½ mile from where nuisance is emanating.  Also limits damages which may be sought.

Fla. Stat. §934.50 – Prohibitions on drone videoing and exceptions.  Without written consent, no person state agency, or a political subdivision may use a drone to record privately owned real property or of the owner, tenant, occupant, invitee, or licensee of such property with the intent to conduct surveillance in violation of such person’s reasonable expectation of privacy. Creates a private cause of action against violators including attorney fees, multipliers, punitive damages, and injunctive relief.

Law enforcement agencies (including code enforcement) may not use drones to gather evidence or other information.  Exceptions include: (a) counter high risk of terrorist attack; (b) search warrant obtained authorizing use of drone; (c) swift action is needed to prevent imminent danger to life or serious damage to property; search for a missing person; prevent imminent: escape of a suspect or destruction of evidence; (d) aerial views of crowds of 50 people or more; (e) assist with traffic management but not to issue traffic citations; (f) collect evidence at a crime or traffic crash scene; (g) Assess  flood, wildlife, natural disaster damage during state of emergency, vegetation or wildlife management on public land or water; (h) fire department personnel to perform tasks within their certification; (i) person engaged in a business or profession licensed by the state, or by an agent, employee, or contractor thereof, if the drone is used only to perform reasonable tasks within the scope of practice or activities permitted under such person’s license; (j) property appraisers for assessing ad valorem taxes; (k) for electric, water, or natural gas utilities; (l) aerial mapping; (m) deliver cargo; (n) capture images necessary to safely operate  or navigate the drone; (o) communication service providers; (p) Fish and Wildlife to eradicate invasive exotic plants or animals on public lands, and suppressing wildfires.

DISCLAIMER:  Topics discussed are general concepts, not intended to constitute legal advice, accuracy, nor completeness, and may not be relied upon as such; consult an attorney or accountant.  The author Randy Gilbert, J.D. is neither an attorney nor an accountant.  FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.” ®

Buying Property During Hurricane Season

Posted on by Randy Gilbert

We know major storms come, so how should realtors and practitioners in disaster prone areas prepare to minimize disruptions in their transactions? According to the National Hurricane Center, Florida’s hurricane season runs from June 1st to November 30th. Facebook also likes to remind me with pop-ups, that for the past 4 years during the exact same week, my family and I have had to prepare for a major storm. Suffice it to say, hurricanes are here to stay.

Property Insurance considerations. As a precondition to loaning money to buy property lenders generally require borrowers to purchase a property insurance policy with 100% Replacement Cost Value (RCV). Watch out because insurers are supposed to offer RCV policies with a “Law and Ordinance” endorsement which: (1) do not include costs necessary to meet applicable laws and ordinances regulating the construction, use, or repair of any property or requiring the tearing down of any property, including the costs of removing debris in the aftermath of a loss; and (2) does include such costs. However, if the insurer does not obtain the policyholder’s written rejection of both coverage options (1) and (2), “any policy covering the dwelling is deemed to include the law and ordinance coverage limited to 25 percent of the dwelling limit.” See, Fla. Stat. §627.7011(1)(a)-(b).

Claims for: Hurricane Michael (10/2018) averaged $57,754, Hurricane Florence (09/2018) $47,138, and Hurricane Harvey (08/2017) $116,823. Hurricane deductibles can be 2%, 5% or 10% of an insurance policy. See, Fla. Stat. §627.701(3)(a). Look for an insurance company that gives an accurate RCV, without over-insuring the property. It’s counterintuitive but, more insurance could mean less coverage for repairs. Consider this scenario, a property costs $1M to purchase, but the insurance agent offers coverage at $1.5M with a 2% deductible. The agent then explains that it will cost more to rebuild (regardless of your purchase price) and that is why the estimate is for $1.5M. First, when buying property, your purchase price included the land and maybe a pool – which generally isn’t going anywhere absent complete Armageddon. So when your agent calculates an RCV, speak to them about how they came up with their RCV estimation. Second think about if you had $60K in damages, the deductible on a $1M Property with a 2% deductible would only be $20K; but if the property were over-insured at $1.5M that deductible would kick up to $30K before any insurance dollars were paid out, meaning less money for the insured. So more insurance can be counter-productive.

Flood Insurance considerations. Flood Insurance is separate from property insurance, even if hurricane winds and rain caused the flood to occur. The term “flood” includes, “The unusual and rapid accumulation or runoff of surface waters from any source.” Properties in high-risk flood areas with mortgages from federally regulated or insured lenders must have flood insurance (and there is no 30 day waiting period). In moderate/low risk flood areas, lenders may require flood insurance. But if there is no lender at all (e.g. cash buyer) or the lender is a Non-FDIC insured lender (e.g. private) and flood insurance is requested, then prepare to wait because there is a 30 day waiting period imposed by the NFIP (National Flood Insurance Program). As a work around, a buyer can purchase private flood insurance company (i.e. not NFIP backed) or have the seller transfer their existing flood insurance to the buyer. If you don’t have coverage and a storm hits, you may not get federal assistance through FEMA unless the event is declared a federal emergency and even then, post-disaster grants averaged less than $10,000.

Be diligent, when a storm is imminent insurers impose a binding moratorium and will not write new insurance policies, making it impossible to get a loan. Therefore, during storm season it is advisable to have the insurance agent “bind” coverage as soon as possible but postpone the effective date the insurance policy goes into effect until the closing date.

Lender/Mortgage Considerations. Lenders and insurers may elect to re-inspect or re-appraise property for storm damage and can charge their borrowers to re-value the property (i.e. the collateral), and cause delays. Further, if the new cost is bundled into the loan (as opposed to being paid outside of closing), then the Loan Estimate would need to change triggering a new 3 day waiting period under TRID. Moreover, interest rate locks may expire during a storm and cost more money to extend. Admirably, we know some awesome mortgage brokers have chosen to eat these cost for their borrowers.

As-IS Contractual Considerations. While the “As-Is Residential Contract For Sale And Purchase” may have a time-is-of-the-essence clause it specifically addresses casualties, losses, and force majeures in varying ways.

In the event of a disruption due to a force majeure, Section 18G allows for all time periods (not just the closing date) to be “extended a reasonable time up to 7 days after the Force Majeure no longer prevents performance under this Contract.” It may surprise you to learn that the term “force majeure” broadly includes any extreme weather, act of God, or unusual transportation delays which, by exercise of reasonable diligent effort, the non-performing party is unable in whole or in part to prevent or overcome. Could a force majeure include an intervening cancelled flight, a death, fed-ex’s failure to transport required documents? If a delay due to a force majeure arises anytime during the course of a contract (not just on the deadline) the parties should promptly provide the other party with a description of the delay, what was done to lessen the delay, the time adjustments needed.  But extensions are not indefinite. Force Majeures that push the closing date more than 30 days allow either party to cancel the Contract without penalty.

“18.G. FORCE MAJEURE: Buyer or Seller shall not be required to perform any obligation under this Contract or be liable to each other for damages so long as performance or non-performance of the obligation, or the availability of services, insurance or required approvals essential to Closing, is disrupted, delayed, caused or prevented by Force Majeure. “Force Majeure” means: hurricanes, floods, extreme weather, earthquakes, fire, or other acts of God, unusual transportation delays, or wars, insurrections, or acts of terrorism, which, by exercise of reasonable diligent effort, the non-performing party is unable in whole or in part to prevent or overcome. All time periods, including Closing Date, will be extended a reasonable time up to 7 days after the Force Majeure no longer prevents performance under this Contract, provided, however, if such Force Majeure continues to prevent performance under this Contract more than 30 days beyond Closing Date, then either party may terminate this Contract by delivering written notice to the other and the Deposit shall be refunded to Buyer, thereby releasing Buyer and Seller from all further obligations under this Contract.”

Typically a due diligence period is around 7 to 15 days; however, Section 10G of the As-IS addresses Flood Insurance by providing 20 days (unless changed) to cancel the contract if the buyer discovers that for insurance purposes the property is “below minimum flood elevation or is ineligible for flood insurance coverage.”

“(d) FLOOD ZONE; ELEVATION CERTIFICATION: Buyer is advised to verify by elevation certificate which flood zone the Property is in, whether flood insurance is required by Buyer’s lender, and what restrictions apply to improving the Property and rebuilding in the event of casualty. If Property is in a “Special Flood Hazard Area” or “Coastal Barrier Resources Act” designated area or otherwise protected area identified by the U.S. Fish and Wildlife Service under the Coastal Barrier Resources Act and the lowest floor elevation for the building(s) and/or flood insurance rating purposes is below minimum flood elevation or is ineligible for flood insurance coverage through the National Flood Insurance Program or private flood insurance as defined in 42 U.S.C. §4012a, Buyer may terminate this Contract by delivering written notice to Seller within _____ (if left blank, then 20) days after Effective Date, and Buyer shall be refunded the Deposit thereby releasing Buyer and Seller from all further obligations under this Contract, failing which Buyer accepts existing elevation of buildings and flood zone designation of Property. The National Flood Insurance Program may assess additional fees or adjust premiums for pre-Flood Insurance Rate Map (pre-FIRM) non-primary structures (residential structures in which the insured or spouse does not reside for at least 50% of the year) and an elevation certificate may be required for actuarial rating.”

Maintaining the property and Casualties are addressed in Section 11 and Section 18M of the As-IS. Sellers are generally required to maintain the property, pool, and landscaping excepting ordinary wear and tear. But in the event of a “Casualty Loss” including from a severe storm or fire which occurs prior to closing, the Seller could be liable for repair costs up to 1.5% of the Purchase Price. If the costs exceed 1.5% then the Buyer can cancel without penalty or take the 1.5% and close as-is.

“11. PROPERTY MAINTENANCE: Except for ordinary wear and tear and Casualty Loss, Seller shall maintain the Property, including, but not limited to, lawn, shrubbery, and pool, in the condition existing as of Effective Date (“AS IS Maintenance Requirement”).”

“18.M. RISK OF LOSS: If, after Effective Date, but before Closing, Property is damaged by fire or other casualty (“Casualty Loss”) and cost of restoration (which shall include cost of pruning or removing damaged trees) does not exceed 1.5% of Purchase Price, cost of restoration shall be an obligation of Seller and Closing shall proceed pursuant to terms of this Contract. If restoration is not completed as of Closing, a sum equal to 125% of estimated cost to complete restoration (not to exceed 1.5% of Purchase Price) will be escrowed at Closing. If actual cost of restoration exceeds escrowed amount, Seller shall pay such actual costs (but, not in excess of 1.5% of Purchase Price). Any unused portion of escrowed amount shall be returned to Seller. If cost of restoration exceeds 1.5% of Purchase Price, Buyer shall elect to either take Property “as is” together with the 1.5%, or receive a refund of the Deposit thereby releasing Buyer and Seller from all further obligations under this Contract. Seller’s sole obligation with respect to tree damage by casualty or other natural occurrence shall be cost of pruning or removal.”

DISCLAIMER:  Topics discussed are general concepts, not intended to constitute legal advice, accuracy, nor completeness, and may not be relied upon as such; consult an attorney or accountant.  The author Randy Gilbert, J.D. is neither an attorney nor an accountant.  FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.” ®

Get Your $#!T Out of My House! – Understanding Bailments

Posted on by Randy Gilbert

In real estate, buyers commonly ask if they can place their stuff in the home before they even bought the home.  Conversely, sellers commonly ask if they can keep their personal property in the home for a limited time after the sale is completed.  This article addresses: (1) What is the relationship created when someone agrees to hold someone else’s personal property?  (2) What precautions could be taken prior to storing someone else’s property?

Scenario #1, Seller tells Buyer, “I cannot close on time unless you allow me extra time to move my personal property out.” Buyer still agrees to buy the house, but graciously gives Seller seven (7) extra days to move Seller’s stuff out.  Once Buyer owns the house, who is responsible for Seller’s stuff and what if Seller never removes it?

Scenario #2, in today’s aggressive market, buyers are offering sellers “post-occupancy agreements” meaning, the buyer agrees to buy seller’s home, but simultaneously allows the seller to remain in the property after closing for a defined period of time (e.g. 1-2 months) for free.  Same question, who is responsible for Seller’s stuff and what if Seller never removes it?

Bailment.  The above scenarios describe a bailment relationship.  In essence, a bailment is created when the recipient (a bailee) temporarily holds an owner’s (the bailor’s) personal property with the expectation of redelivering the property back to the owner (bailor).[1]  Valeting a car is a common example of a mutually beneficial bailment, where the driver is the bailor (owner) who gets a benefit of being able to park his car, and the valet attendant (recipient) is the bailee who gets paid to store and return the car.   “Unlike a sale or gift, … a bailment involves a change in possession, not title.”[2]

There are different types of bailments such as: those for: (1) the exclusive benefit of the bailor (owner); (2) exclusive benefit of the bailee (recipient); or (3) for both of their mutual benefits.  Classifying the parties’ relationship is important because it defines the “duty of care” the bailee (recipient) must exercise when holding onto the bailor (owner’s) property.   Absent a contract clause redefining the relative rights of the bailor and bailee, the rules of bailment will generally control.

In this article we are talking about a “gratuitous bailment.”  One where the bailor (owner) asks to have their property stored by the bailee (recipient). In that scenario, there really is no benefit to the bailee (recipient).  So under what situation would the bailee (recipient) be responsible should something happen to the bailor (owner’s property) while being stored by the bailee (recipient)?

“If the bailment were gratuitous, it would be necessary to establish gross negligence on the part of the [bailee] in order for the [bailor] to recover against the bailee.”[3]  While gross negligence is very hard to prove; who wants any type of claim to be made at all?

Disclaimer Overkill.  Based on the above scenarios, Bryce Gilbert, Esq., owner, operator, and company attorney for Florida’s Title Insurance Company has proposed potential language, which is admittedly overkill, but the point is to addresses many concepts that the parties may not have thought about, which can be modified to suit your own individual purposes:

PROPERTY STORAGE DISCLAIMER

  1. Buyer may store Buyer’s personal property within Seller’s Property only in a location where Seller directs.
  2. Buyer may not store dangerous, hazardous, toxic, flammable, or anything that would cause undue risk to Seller.
  3. Seller may reject and refuse to store any of Buyer’s personal property.
  4. Seller is not obligated to inspect Seller’s property prior to taking possession of Seller’s property.
  5. Buyer shall only use licensed and insured movers, and shall name seller as an additional insured.
  6. Buyer shall apply for, obtain, and continue to comply with all Condominium or HOA rules, regulations, and requirements relating to moving.
  7. Buyer’s property is being stored at Buyer’s own and sole risk, and Buyer assumes full responsibility.
  8. Buyer shall purchase insurance coverage relating to Buyer’s personal property.
  9. Buyer fully releases and holds Seller (which includes its agents) harmless of and from any and all liability and damages arising out of, related to, or concerning Buyer’s personal property.
  10. Buyer waives any and all claims against Seller including but not limited to: negligence; gross negligence; intentional tort; recklessness; bailment; bad faith; theft; vandalism; casualty; conversion; trespass to chattel; fraud; civil theft; force majeur; accounting; claims in equity or in law; deterioration; or destruction; arising out of, related to, or concerning Buyer’s personal property whatsoever.
  11. Seller has no: duty of care; obligation to secure, safeguard, protect, prevent unauthorized use; nor keep separate, Buyer’s personal property.
  12. Seller is authorized to relocate Buyer’s property, without Buyer’s prior permission.
  13. Buyer agrees to indemnify and hold Seller harmless for any and all damages, attorney fees, costs, and liability arising out of or related to Buyer’s personal property.
  14. In the event Buyer fails to close on or before the closing date, Seller may demand (by providing notice to either Buyer or Buyer’s realtor which shall be deemed effective upon Buyer) that Buyer promptly and immediately remove Buyer’s personal property using licensed and insured movers within seven (7) calendar days (“Seller’s Notice”); and if Buyer fails to completely remove Buyer’s property then Buyer’s property will be deemed abandoned.
  15. After Buyer’s property is deemed abandoned, Seller may: (1) Charge Buyer $____ day for on-site storage / nuisance as a liquidated damage starting from the date of “Seller’s Notice” until such time as Buyer’s property is fully removed; (2) Take possession of the property; (3) Remove Buyer’s personal property without any liability whatsoever and in whatever manner and means Seller chooses in Seller’s sole and exclusive discretion; and (3) hold Buyer additionally liable for any and attorney fees and costs arising out of or relating to removal, storage, sale, retention, and disposition of the personal property whatsoever.
  16. The parties waive the requirements and application of Florida Chapter 715 relating to Disposition of Personal Property Landlord and Tenant Act..

DISCLAIMER:  Topics discussed are general concepts, not intended to constitute legal advice, accuracy, nor completeness, and may not be relied upon as such; consult an attorney or accountant.  The author Randy Gilbert, J.D. is neither an attorney nor an accountant.  FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.” ®

[1] S & W Air Vac Sys., Inc. v. Dept. of Rev., 697 So. 2d 1313, 1315 (Fla. 5th DCA 1997)

[2] Black’s Law Dictionary (11th ed. 2019) bailment.

[3] Armored Car Service, Inc. v. First Nat. Bank of Miami, 114 So. 2d 431, 434 (Fla. 33rd DCA 1959). (if the bailment relationship is mutually beneficial to both the bailee (recipient) and bailor (owner) then to recover damages against the bailee (recipient) the bailor would only need to prove the much lower standard of ordinary negligence.

Undoing Deeds – Disclaiming Property Rights

Posted on by Randy Gilbert

So why would someone want to refuse property given to them? 

Scenario #1 – Disinterested.  The first thought cloud that popped into to my head was: two (2) people in a car get pulled over, the passenger throws his bag of drugs to the driver and says, “here it’s yours!”  The driver looks back stupefied – now what?  “I disclaim this belongs to me!” says the driver. The scenario is extreme, but it gets the point across.

Because what prompted me to write this article was, what if a grantor conveyed real estate that the grantee either: never wanted; was mistakenly given; or due to grantee’s predicaments would not be within grantee’s best interest to take?

Scenario #2 – Mistake.  Errors in deeds are more common than you think but not all of them are easily fixed.[1] What if a grantor mistakenly conveys title to the wrong grantee?  Too bad, so sad for that grantor.  A corrective deed may not be used,[2] but as this article addresses there may be a work around.

Scenario #2 – Burdensome.  What if the property was undesirable; plagued by liens, code violations, environmental contamination, waste, an unsafe structure, and it would cost more to rehabilitate than it was worth?

Scenario #3 – Evading Judgment Creditors.Or a more common scenario, what if wealthy Grantor Grandpa wants to leave his three (3) grandchildren valuable property, but prior to or at the time of Grantor Grandpa’s death, one of the three (3) grandchildren, Debtor Dave racked up some serious judgments against him?  If Debtor Dave receives that 1/3rd interest it could be levied against and taken by Debtor Dave’s creditors.  Can a Grantee/Donee/Recipient of property give back property which is already deeded, conveyed, transferred, and recorded in the public records and which shows Debtor Dave as an Owner?

Undoing a Deed Transfer as if it Never Happened.   As a title company we deal with conveying and transferring property, but can a transfer be undone, rescinded, nullified, or cancelled?  I am not talking about transferring the property back – like A transfers to B, the property is vested in B, and then B transfers back to A (i.e. two separate transfers).  What I am talking about is cancelling the vested transfer as if the transfer from A to B never happened?  As if title never left A, and the property never vested in B in the first place?  Is there a way to hit Ctrl + Z, backspace, and just undo a deed?  The answer seems to be Yes.

The Florida Uniform Disclaimer of Property Interests Act (“FUDOPIA”) applies to disclaimers of any interest in or power over property, whenever created, and with limited exception (see below when barred) is the exclusive means under Florida law that a disclaimer may be made.[3]  “Disclaimer” and “Renunciation” both mean, the refusal to accept an interest in or power over property (like when appointed as a trustee, power of attorney, or agent over property).[4]  A person who disclaims an interest or power in property is called the Disclaimant.[5]

When Can a Disclaimer be Made?  Unless barred, a disclaimer can be made at any time.[6]

When are Disclaimers Barred or Disallowed?  You can lose your right to disclaim or renunciate your interest in property. Most poignantly, when taking affirmative action that would be completely inconsistent with disclaiming.  In other words, you cannot have your cake and eat it to.  You cannot utilize or accept an interest in property and then simultaneously disavow that you have any interest in that same property.  So a disclaimer of an interest in property will not be allowed in four (4) instances: (1) a written waiver of the right to disclaim; (2) The disclaimant accepts the property interest before the disclaimer becomes effective; (3) The disclaimant voluntarily assigns, conveys, encumbers, pledges, or transfers the property interest or contracts to do the foregoing before the disclaimer becomes effective; (4) The disclaimant is insolvent when the disclaimer becomes irrevocable. [7]  “Insolvent” means, that the sum of a person’s debts is greater than all of the person’s assets at fair valuation and that the person is generally not paying his or her debts as they become due. [8]

Can the Disclaimer be Partial, or Must it be Entirely?   A person can disclaim all or part, conditionally or unconditionally, any interest in or power over property. [9]  A partial disclaimer may be expressed as a fraction, percentage, monetary amount, term of years, limitation of a power, or any other interest or estate in the property. [10]

Can the Grantor prevent the Grantee from Disclaiming?  No.  Florida apparently does not follow one of the more creative playground rules known as “No take backs!”  In Florida, a person may disclaim their interest even if its creator imposed a restriction or limitation on the right to disclaim.  So a grantor cannot deed property to a grantee and eliminate the grantee’s right to renunciate or disclaim the property by including words to the effect of “No take backs.”  If a disclaimant makes a disclaimer then it is considered unconditional unless the disclaimant explicitly provides otherwise in the disclaimer.[11]

What are the Requirements for an Effective Disclaimer?  To be effective, a disclaimer must be: (1) in writing, (2) declare the writing as a disclaimer, (3) describe the interest or power disclaimed, (4) be signed by the person making the disclaimer, and (5) witnessed[12] and (6) acknowledged[13] in the manner provided for deeds of real estate to be recorded[14] in this state.[15]  Generally, a deed needs to be in writing, signed in the presence of two subscribing witnesses, properly signed and notarized, and meet certain requirements before it may be recorded.[16]

Delivering the Disclaimer.  In addition, for a disclaimer to be effective, the original disclaimer must be either delivered or filed.[17]  Delivery of a disclaimer may be effected by personal delivery, first-class mail, or any other method that results in its receipt.[18] Notwithstanding, delivery of a disclaimer of an interest in or relating to real estate is presumed upon recording the disclaimer in the county where the real estate is located.  A disclaimer sent by first-class mail is deemed delivered on the date it is postmarked, delivery by other methods are effective upon receipt.

When a Disclaimer is Invoked, When Does the Disclaimer Take Effect?  Once the disclaimer is validly invoked, it takes effect as of the time the instrument creating the interest becomes irrevocable.[19]  If however the interest arises under the laws of intestate succession (i.e. someone dying without a will or some other legal declaration), then the disclaimer will take effect at the time of the intestate’s death.[20]

So if the Property Interest is Disclaimed by the Intended Grantee, Who Does the Property Interest Now Belong To?   When a disclaimer occurs, it is not considered a transfer, assignment nor a release.[21]  Rather, well… this is weird, if you disclaim an interest in property, then much like your mother-in-law (just a joke), the law treats you as if you were dead.  Assuming that the instrument creating the interest does not say what happens if a disclaimer is made (e.g. if John disclaims then the interest goes to Jane) then the question turns to is the grantee an individual or not?

If the disclaimant is not an individual (e.g. a corporation, LLC, most trusts[22]  ) then the disclaimed interest passes as if the disclaimant did not exist. [23]  A deed from the owner to a nonexistent entity is a nullity.[24]  So, if a grantor conveyed to a non-existent entity it would be as if the conveyance was a nullity.

However, if the disclaimant is an individual then the disclaimed interest passes as if the disclaimant had died immediately before the interest was created, unless under the governing instrument or other applicable law the disclaimed interest is contingent on surviving to the time of distribution, in which case the disclaimed interest passes as if the disclaimant had died immediately before the time for distribution.[25] So by example, if Grantor Grant conveys to Disclaiming Dan then it would be as if Grantor Grant conveyed to a dead guy, in which case presumably the property interest would revert back to Grantor Grant.  Strict legal title may not pass by a deed to a dead grantee.[26]  Title cannot vest in a fictitious person.[27]

Different rules apply to what happens to the property interest if the property interest being disclaimed is: a joint tenant with rights of survivorship,[28] a trust’s property,[29] or property held as tenants by the entirety.[30]

DISCLAIMER:  Topics discussed are general concepts, not intended to constitute legal advice, accuracy, nor completeness, and may not be relied upon as such; consult an attorney or accountant.  The author Randy Gilbert, J.D. is neither an attorney nor an accountant.  FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.” ®

[1] house Of Representatives Staff Analysis Bill # CS/HB 567 Correction of Errors in Deeds FN. 2.

[2] See, Florida Uniform Title Standard 3.2 “A grantor who has conveyed land by an effective and unambiguous deed cannot avoid the effect of such conveyance by executing a new deed making a change in the conveyance, even though the latter deed purports to correct or modify the former.”  Compare Fla. Stat. 689.041 689.041 – Curative procedure for scrivener’s errors in deeds; see also, Five Tips Every Real Estate Practitioner Should Know About Defective Deeds Fla. Bar Journal, Vol. 82, No. 5  (May 2008)  Pg 37 by Stacy O. Kalmanson and Jerry Morris.

[3] Fla. Stat. §739.103 – Scope.  But see, Fla. Stat. §739.402 – When disclaimer is barred or limited.

[4] Fla. Stat. §739.102(5) – Definitions.

[5] Fla. Stat. §739.102(3) – Definitions.

[6] Fla. Stat. §739.401 – When disclaimer is permitted; but compare, Fla. Stat. §739.402 – When disclaimer is barred or limited.

[7] Fla. Stat. §739.402 – When disclaimer is barred or limited.

[8] Fla. Stat. §739.102(8) – Definitions.  See also, Fla. Stat. §726.102 – Definitions.  “The term ‘Asset’ means property of a debtor, but the term does not include: (a)?Property to the extent it is encumbered by a valid lien; (b) Property to the extent it is generally exempt under nonbankruptcy law; or (c) An interest in property held in tenancy by the entireties to the extent it is not subject to process by a creditor holding a claim against only one tenant.”

[9] Fla. Stat. §739.104(1) – Power to disclaim; general requirements; when irrevocable.

[10] Fla. Stat. §739.104(4) – Power to disclaim; general requirements; when irrevocable.

[11] Fla. Stat. §739.104 – Power to disclaim; general requirements; when irrevocable.

[12] See, Fla. Stat. §689.01 – How real estate conveyed; Fla. Stat. §692.01 – Conveyances executed by corporations; and Fla. Stat. §692.02 – Validation of conveyances; Fla. Stat. §605.04074(3) – Agency rights of members and managers.

[13] See, Fla. Stat. §695.03 – Acknowledgment and proof; validation of certain acknowledgments; legalization or authentication before foreign officials.; Fla. Stat. §117.04 – Acknowledgments; and Fla. Stat. §117.05 – Use of notary commission.

[14] See Fla. Stat. §695.26 – Requirements for recording instruments affecting real property.

[15] Fla. Stat. §739.104(3) – Power to disclaim; general requirements; when irrevocable.

[16] See, Fla. Stat. §689.01 – How real estate conveyed; Fla. Stat. §692.01 – Conveyances executed by corporations; and Fla. Stat. §692.02 – Validation of conveyances; Fla. Stat. §605.04074(3) – Agency rights of members and managers.

[17] Fla. Stat. §739.104(3) – Power to disclaim; general requirements; when irrevocable.

[18] Fla. Stat. §739.301 – Delivery or filing.  Different methods for filing and delivering apply for disclaimers of interests created under: Law of intestate succession or will §739.301(2); testamentary trust; §739.301(3); intervivos trust §739.301(4); Beneficiary designation made before the time the designation becomes irrevocable §739.301(5); Beneficiary designation made after the time the designation becomes irrevocable §739.301(6); by a surviving holder of jointly held property, or by the surviving tenant in property held as a tenancy by the entirety,§739.301(7); by an object, or taker in default of exercise §739.301(8); appointee of a nonfiduciary power of appointment §739.301(9); by a fiduciary of a power over a trust or estate §739.301(10); a power exercisable by an agent §739.301(11); §739.301(12)

[19] Fla. Stat. §739.201 – Disclaimer of interest in property.

[20] Fla. Stat. §739.201 – Disclaimer of interest in property.

[21] Fla. Stat. §739.104(6) – Power to disclaim; general requirements; when irrevocable.

[22] Fla. Stat. §739.201(3)(a) – Disclaimer of interest in property.  Referring to Fla. Stat. § 733.707 Carving out a different procedures for trusts where the grantor has at the decedent’s death the right of revocation.

[23] Fla. Stat. §739.201(3)(b) – Disclaimer of interest in property.

[24] See, Florida’s Uniform Title Standard 3.1, citing Fund Title Note 11.01.05, citing, Belcher Center LLC v. Belcher Center, Inc., 883 So.2d 338 (Fla. 2d DCA 2004).

[25] Fla. Stat. §739.201(3)(a) – Disclaimer of interest in property.  (“However, if, by law or under the governing instrument, the descendants of the disclaimant would share in the disclaimed interest by any method of representation had the disclaimant died before the time of distribution, the disclaimed interest passes only to the descendants of the disclaimant who survive the time of distribution. For purposes of this subsection, a disclaimed interest is created at the death of the benefactor or such earlier time, if any, that the benefactor’s transfer of the interest is a completed gift for federal gift tax purposes.”)

[26] Fund Title Note 10.04.01 Death of One Joint Grantee Before Execution of Deed citing, Hutto v. Hutto, 66 Fla. 504 (1913) (However, where dead grantee paid for the property prior to the dead grantee dying, the dead grantee’s estate could maintain an equitable action to quiet title and reformation of the deed).

[27] Fund Title Note 10.04.02 Fictitious Names

[28] Fla. Stat. §739.202 – Disclaimer of rights of survivorship in jointly held property.

[29] Fla. Stat. § 739.204 – Disclaimer of interest by trustee.

[30] Fla. Stat. §739.203 – Disclaimer of property held as tenancy by the entirety; see also Fla. Stat. §732.4015 Devise of homestead.—regarding devise of homestead by surviving spouse.

Giving the Bird. Lady-Bird Deeds

Posted on by Randy Gilbert

History behind the Lady Bird Deed – Myth Busted. “When you have a choice of printing the truth or the legend—print the legend.”[1]

Many still believe the origin of the “Lady Bird Deed” came from an ingeniously drafted deed first used by President Lyndon B. Johnson’s lawyers which allowed the President to retain full ownership and control of his real estate while alive, but triggered a transfer on death (n/k/a T.O.D.) clause to automatically pass real estate upon Lyndon B. Johnson’s death instantaneously to: (1) his wife “Lady Bird” Johnson, and then (2) upon her death to their children, without the delays or expense of a will, trust, court proceeding, or probate.

Wives of presidents are referred to as “The First Lady,” so is that where the term “Lady Bird Deed” came from?  Nope.  Claudia Alta “Lady Bird” Johnson was nicknamed at six (6) years old by her nanny, because she was said to be, “as pretty as a lady bird.”[2]  So the famous “Lady Bird Deed” got its name from a six-year old’s nanny?  Nope again.

A hunt for the original Lady Bird Deed revealed that neither the supervisory archivist, nor deputy director of The Lyndon B. Johnson Library, ever heard of a Lady Bird Deed.  Moreover, the librarians’ follow-up with both the surviving members of the Johnson family, and more importantly the financial administrators of Mrs. Lady Bird Johnson’s estate, also dead-ended, as no one ever heard of a Lady Bird Deed.[3]

Comically, “the first Lady Bird deed was drafted by Florida attorney Jerome Ira Solkoff around 1982, nearly ten years after the death of President Johnson. In his elder law book and lecture materials, Solkoff used a fictitious cast of characters with the names Lyndon (husband), Lady Bird (wife), Lucie (daughter), and Lynda (daughter) in examples explaining the usefulness of this new type of deed. So as the-story-goes the nickname Lady Bird became associated with the deed.”[4]  Jerome Ira Solkoff, Esq. reconfirmed the story.[5]

Today Lady Bird Deeds, which are more formally called enhanced life estates, are commonly used in Florida and throughout the United States.  Nineteen (19) other states codified its use by adopting the Uniform Real Property Transfer on Death (TOD) Act and today there are talks in the Florida Bar’s RPPTL  section (Real Property Probate and Trust Section) about possibly doing the same.

Chart showing Differences between Enhanced Life Estate (i.e. Lady Bird Deed) Regular Life Estate
Chart showing Differences between Enhanced Life Estate (i.e. Lady Bird Deed) Regular Life Estate

I. What is a Lady Bird Deed (a/k/a Enhanced Life Estate)?  When property is owned, it is usually owned as fee simple absolute, meaning the grantee (i.e. recipient) receives 100% ownership and control of the property.  But if an owner wanted to maintain ownership of their property for their entire life and leave it to their spouse and descendants without the need of a will, trust, or probate then the use of Life Estates is a great alternative.

II. Advantages of Enhanced Life Estate.  Using a Lady Bird Deed, you can grant yourself an enhanced life estate interest in your own property and simultaneously grant your beneficiaries, called remaindermen, the real property upon your death.  A life estate obtained through a Lady Bird Deed is called an enhanced life estate.  The life estate is said to be enhanced because during the enhanced life estate holder’s lifetime they have all the characteristics of full ownership without the burdens that come with a regular life estate.

Under an enhanced life estate, during the owner’s lifetime, the beneficiaries have no interest in the land, because the owner retains full power to remove the beneficiary, until the owner dies.  Because no property interest vests in the beneficiary until the transferor’s death, the transferor retains complete control to amend, modify, or revoke the beneficiary’s designation during the transferor’s lifetime.  Stated another way, the Lady Bird Deed does not transfer a current interest in the property to the beneficiary.  Generally, all that is required to remove a remaindermen is the filing of a revocation of the lady bird deed prior to the grantor owner’s death. Because no property interest passes to the beneficiary until the death of the transferor, such revocation does not require the named beneficiary, or beneficiaries, to join. If a transferor wishes to modify the beneficiaries to a particular piece of real property, the transferor can simply execute and record a subsequent deed, which will supersede the previous transfer and become the effective deed.[11]  Moreover, unlike a regular life estate, an enhanced life estate holder can still mortgage, encumber, sell, transfer, or modify, the real property without the remaindermen’s consent.

III. Example of Enhanced Life Estate.  The example that made the Lady Bird Deed famous is:

Lyndon and Lady Bird, his wife, grantors, to Lyndon and Lady Bird, his wife, grantees, a life estate, without any liability for waste, with full power and authority in them to sell, convey, mortgage, lease and otherwise dispose of the property described below in fee simple, with or without consideration and without joinder by the remaindermen, and to keep absolutely any and all proceeds derived therefrom. Further, the grantors reserve the right to change remaindermen at any time without consent of remaindermen. Upon death of the life tenants, title shall be in Lucy and Lynda, joint tenants with rights of survivorship.[12]

IV. Regular Life Estates distinguished. The key advantages of the enhanced life estate is its  combination of retained control for the transferor, simplicity, and revocability.Regular life estates however are irrevocable.  When a regular life estate holder identifies the remaindermen in the deed, the remaindermen receive an immediate vested right in the real estate, regardless of when the regular life estate holder dies.  Therefore, there is no removing the remaindermen without the remaindermen’s consent.  Moreover, if a regular life estate holder wanted to mortgage, encumber, sell, or affect the real property to the detriment of the remainderman, they could not unless the regular life estate holder obtained the remainderman’s prior permission.  An ordinary life tenant had no right to cut the timber for commercial purposes without the remaindermen’s consent.[13]  Furthermore, because remaindermen receive an immediate vested interest, the remainderman’s interest in the real estate is subject to collection from creditors.  A regular life estate holder cannot neglect the property allowing it to fall into disrepair or commit waste or fail to pay taxes and if it does then the remainder can have a receiver appointed over the property.[14]    The remainder (future) interest holder must approve any improvements to the property, and has the right to inspect the property for waste or damage.[15]

In Florida, a tenant for life or a person vested with an ordinary life estate [i.e. not an enhanced life estate] is entitled to the use and enjoyment of his estate during its existence. The only restriction on the life tenant’s use and enjoyment is that he not permanently diminish or change the value of the future estate of the remainderman. This limitation places on the `ordinary life tenant’ the responsibility for all waste of whatever character. It is well settled that life tenants are bound in law to pay property taxes during their continuance of their estate. Failure to pay taxes constitutes waste. Therefore, it follows that the wife [ordinary life estate holder] would have the responsibility to pay all ordinary and necessary expenses that inure to a homeowner, including taxes, insurance, homeowner’s association fees, and general repairs for the upkeep and maintenance of the property, and not to dissipate or cause waste to the [remaindermen’s future] property.[16]

V. How long does a life estate last?  Sounds silly I know, Typically, the owner of the life estate (called a life tenant) owns the property during their own lifetime and upon the death of the life tenant the remaindermen then become the new owner.  However, a life estate may be measured by the life of another, which is called a life estate per autre vie – French “for the life of another.”

VI. Medicaid planning.  Medical assistance (Medicaid) is a program funded jointly by the states and the federal government.  It provides health coverage to pay for hospital stays, doctor bills, prescription drugs, and other health costs.  In Florida, the Agency for Health Care Administration is responsible for Medicaid.  To apply for Medicaid in Florida, an individual must provide a detailed list of all their assets to Florida’s Department of Children and Family Services or the Social Security Administration.

The Lady Bird Deed transfer has no effect on Medicaid eligibility.[17]

Furthermore, if you become a Medicaid recipient, then a Lady Bird Deed can be useful in avoiding Medicaid bills, by reducing or even eliminating the amount your estate would need to pay back to Medicaid.  After a Medicaid recipient dies, Medicaid can seek repayment “Upon filing of a statement of claim in the probate proceeding” against the decedent’s estate.[18]

First, Medicaid only seeks reimbursement from assets within the probate estate.  Real estate held as an enhanced life estate, will not be included in a probate estate, because it automatically transfers to the beneficiary (i.e. the remaindermen) upon death.  So that property would not be included in the probate estate.  Therefore, using a Lady Bird deed can allow heirs to inherit a property that might otherwise have been sold to pay a Medicaid reimbursement claim.

Secondly, a Florida Medicaid recipient’s homestead is exempt from Medicaid reimbursement.[19]  Homesteaded property is disregarded.[20]  So what we are really talking about trying to protect is non-homestead real estate in Florida (such as rental, vacation homes, or investment property) which may be subject to Medicaid repayment.

By keeping non-homesteaded  real estate in a Lady Bird Deed, the property never becomes part of the deceased’s probate estate.  The State will not be able to make a claim against any property with a valid Lady Bird Deed, because the property does not become part of the decedent’s estate. Instead, the property automatically transfers into the ownership of the beneficiary/remaindermen listed on the Lady Bird Deed.

DISCLAIMER:  Topics discussed are general concepts, not intended to constitute legal advice, accuracy, nor completeness, and may not be relied upon as such; consult an attorney or accountant.  The author is neither an attorney nor an accountant.  FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.” ®

[1] 1962 John Ford film, “The Man Who Shot Liberty Valance” starring John Wayne and James Stewart.

[2]  Obituary: Lady Bird Johnson BBC Online. July 12, 2007

[3] Kary C. Fran, The Search for the Lady Bird Deed 34 Mich. Prob. & Test. Plan. J. (Summer 2015).

[4] Gerry W. Beyer & Kerri M. Griffin, Lady Bird Deeds: A Primer for the Texas Practitioner, Estate Planning Developments For Texas Professionals, (Jan. 2011)

[5] Id.  citing, 14 Fla. Prac., Elder Law § 9:53 “Lady Bird” life estate deeds—Life estate deed to convey future title to heirs (2014-15 ed.)

[6] Fla. Stat. §196.041(2) – Extent of homestead exemptions.— “A person who otherwise qualifies by the required residence for the homestead tax exemption provided in s. 196.031 shall be entitled to such exemption where the person’s possessory right in such real property is based upon an instrument granting to him or her a beneficial interest for life, such interest being hereby declared to be “equitable title to real estate….”

[7] “The homestead “ownership” requirement under the Florida Constitution does not restrict the type of property ownership; therefore, a life tenant can qualify for the homestead creditor exemption with his or her life estate. The Florida Supreme Court in Aetna Ins. Co. v. Lagasse, 223 So. 2d 727 (Fla. 1969), held that remainder interests, including vested remainders, were not able to qualify for the homestead creditor exemption, even if he or she lived on the property, because there was no ‘present right to possession.’ Thus, a life tenant can qualify for the homestead creditor exemption with a life estate, but the Florida Supreme Court has determined that a remainderman cannot qualify with a remainder interest.” See, Joseph M. Percopo, Esq., The Impact Of Co-Ownership On Florida Homestead, Vol. 86, No. 5 Pg. 32 (Florida Bar Journal May 2012).

[8] It is possible for a life estate holder to disclaim or renunciate a gift of the interest given.  See, Weinstein v. Mackey, 408 So.2d 849 (Fla. 3d DCA 1982) (regarding renunciation of a life estate by a beneficiary); Richey v. Hurst, 798 So.2d 841 (Fla. 5th DCA 2001) (surviving spouse is given a life estate created under a trust and later disclaims that life estate even after the life estate has commenced); Kearley v. Crawford, 112 Fla. 43, 151 So. 2d 293 (Fla. 1933) (creditor unable to collect on judgment to force the sale of land left to son, when before judgment was rendered against him, debtor/son renounced his devise under a will, as well as his rights as an heir at law.  “[E]lection to take under or against a will is a personal right of the legatee or devisee, and that it is one that cannot be controlled by his creditors”); Robert C. Meyer, Esq. Disclaimer Statute May Permit Judgment Debtors To Deliver Money To Friends Or Family With Nothing To Creditors, But Not Always In Florida Vol. 79, No. 4 Pg. 42 (Florida Bar Journal April 2005); Florida Statute §689.21  Disclaimer of interests in property passing under certain nontestamentary instruments or under certain powers of appointment.

[9] “When the life tenant qualifies for the homestead creditor exemption, the property is still protected from the life tenant’s creditors, but it is not safe from the remainderman’s creditors. For example, if Donna takes a life estate in blackacre while qualifying for the homestead creditor exemption and grants Ed and Frank equal remainder interests, Ed and Frank’s creditors can potentially take their remainder interests in blackacre. However, even if Ed or Frank’s creditors took their interest, there is little they could do with it until Donna died. Co-owners who share interests in time (life tenants and remainderman), unlike co-owners who share present interests, may not partition life estates. Therefore, a life tenant, such as Donna, could continue to reside on the property without worrying about the remaindermans’ creditors being able to force sale of the property. However, it is important to note that recently, two Florida bankruptcy cases held that a person with a vested remainder who lived on and made the property his or her residence could qualify for the homestead creditor exemption.”See, Joseph M. Percopo, Esq., The Impact Of Co-Ownership On Florida Homestead, Vol. 86, No. 5 Pg. 32 (Florida Bar Journal May 2012).

[10] Florida Statute §738.801 Apportionment of expenses; improvements.—

(1) For purposes of this section, the term:

(a) “Remainderman” means the holder of the remainder interests after the expiration of a tenant’s estate in property.

(b) “Tenant” means the holder of an estate for life or term of years in real property or personal property, or both.

(2) If a trust has not been created, expenses shall be apportioned between the tenant and remainderman as follows:

(a) The following expenses are allocated to and shall be paid by the tenant:

  1. All ordinary expenses incurred in connection with the administration, management, or preservation of the property, including interest, ordinary repairs, regularly recurring taxes assessed against the property, and expenses of a proceeding or other matter that concerns primarily the tenant’s estate or use of the property.
  2. . Recurring premiums on insurance covering the loss of the property or the loss of income from or use of the property.
  3. Any of the expenses described in subparagraph (b)3. which are attributable to the use of the property by the tenant.

(b) The following expenses are allocated to and shall be paid by the remainderman:

  1. Payments on the principal of a debt secured by the property, except to the extent the debt is for expenses allocated to the tenant.
  2. Expenses of a proceeding or other matter that concerns primarily the title to the property, other than title to the tenant’s estate.
  3. Except as provided in subparagraph (a)3., expenses related to environmental matters, including reclamation, assessing environmental conditions, remedying and removing environmental contamination, monitoring remedial activities and the release of substances, preventing future releases of substances, collecting amounts from persons liable or potentially liable for the costs of such activities, penalties imposed under environmental laws or regulations and other payments made to comply with those laws or regulations, statutory or common law claims by third parties, and defending claims based on environmental matters.
  4. Extraordinary repairs.

(c) If the tenant or remainderman incurred an expense for the benefit of his or her own estate without consent or agreement of the other, he or she must pay such expense in full.

(d) Except as provided in paragraph (c), the cost of, or special taxes or assessments for, an improvement representing an addition of value to property forming part of the principal shall be paid by the tenant if the improvement is not reasonably expected to outlast the estate of the tenant. In all other cases, only a part shall be paid by the tenant while the remainder shall be paid by the remainderman. The part payable by the tenant is ascertainable by taking that percentage of the total that is found by dividing the present value of the tenant’s estate by the present value of an estate of the same form as that of the tenant, except that it is limited for a period corresponding to the reasonably expected duration of the improvement. The computation of present values of the estates shall be made by using the rate defined in 26 U.S.C. s. 7520, then in effect and, in the case of an estate for life, the official mortality tables then in effect under 26 U.S.C. s. 7520. Other evidence of duration or expectancy may not be considered.

(3) This section does not apply to the extent it is inconsistent with the instrument creating the estates, the agreement of the parties, or the specific direction of the taxing or other statutes.

(4) The common law applicable to tenants and remaindermen supplements this section, except as modified by this section or other laws.

[11] Stephanie Emrick, Transfer on Death Deeds: It Is Time to Establish the Rules of the Game, 70 Fla. L. Rev. 469 (2018).

[12] 14 Fla. Prac., Elder Law § 9:53 “Lady Bird” life estate deeds—Life estate deed to convey future title to heirs (2020-2021 ed.)

[13] See, Sauls v. Crosby, 258 So. 2d 326, 327 (Fla. 1st D.C.A. 1972)

[14] Chapman v. Chapman, 526 So. 2d 131, 135 (Fla. 3d D.C.A. 1988) “Upon the failure of the life tenant to pay the taxes, the remainderman is entitled to have a receiver appointed to collect the rents and apply them to discharge the tax indebtedness.”

[15] Joseph M. Percopo, Esq., The Impact Of Co-Ownership On Florida Homestead, Vol. 86, No. 5 Pg. 32 (Florida Bar Journal May 2012).

[16]  Schneberger v. Schneberger, 979 So. 2d 981 (Fla. 4th D.C.A. 2008)

[17] 1640.0613.01 Property Transferred and Life Estate Retained (MSSI)  “If an individual retains life estate using a lady bird deed or life estate with powers, no transfer has occurred. The individual retains full ownership powers in the property and it is only upon their death that the property transfers ownership to the remainderman.”

[18] Florida Statute §409.9101 Recovery for payments made on behalf of Medicaid-eligible persons.

[19] 1640.0305.03 Life Estate Ownership (MSSI, SFP) ““The owner of an enhanced life estate (also known as a lady bird deed or life estate with powers) has the same rights as complete ownership, including the right to sell without the consent of the remainderman. Lady bird deeds and life estates with powers are counted the same as other real property an individual may own and it may be excluded if it qualifies as the individual’s homestead, including under intent to return when absent from the home.”

[20] “Florida Statute §409.9101(7)  “No debt under this section shall be enforced against any property that is determined to be exempt from the claims of creditors under the constitution or laws of this state.”