A NON-RESIDENT'S GUIDE TO BUYING PROPERTY IN FLORIDABy: JAMES R. LAVIGNE, ESQ.,

Juris Doctor, University of Florida,L.L.M., International Law, London

Copyright 2013, James R. Lavigne, reprinted with permission

One of the world's fastest-growing tourist destinations, Florida, has also emerged as one of the most desirable areas for international investments. A major reason is that the area offers a unique combination of climate, weather and dollar value for land and housing.

The area has a host of very professional property developers, brokers and builders. But, in common with any fast-growing areas, investors should be inquisitive about the people they are dealing with.

Our suggestion is to always investigate a home seller's background and their business reputation. Another point is that resales of properties simply don't get the same value and protection or security as original purchases of homes. Original homes sellers can give extended homeowners warranties and guaranties that you often cannot get with a resale.

Buying and investing in Florida can be both exciting and profitable. But, buyers should exercise the same careful planning here that they know is necessary elsewhere.

Many of the British investors who retain our firm find that the immigration laws allow them to stay in Florida for up to six months out of each year, giving them plenty of time to thoroughly investigate their investments.

For other British investors who want to both live and work in Florida, U.S. immigration laws allow this to be done in several ways. One approach is to obtain the E-1 visa as a treaty trader. This is for someone engaged in substantial trade in goods or services between the U.S. and the U.K.

Another way to live and work in Florida is to obtain an E-2 visa, which is available to investors or executives and managers with specialized knowledge who have made a substantial investment in an ongoing commercial enterprise which is not marginal in nature. Both E-1 and E-2 visas can be renewed indefinitely so long as the business continues.

Serious investors who want a green card find that an investment of at least $1,000,000 is required. The investment must also create employment for ten U.S. citizens or permanent residents. Investments for as little as $500,000 can be done for enterprises located in high unemployment and rural areas.

Knowing the law is often important in buying Florida

property. This is an area where a law firm such as South Milhausen, P.A. can contribute. Here are seven other major steps to successfully buy all types of property in Florida.

(1) Know the property. Visit the property. Never sign your contract until after you have actually seen what you are buying. Remember, this is a good way to avoid any unpleasant surprises.

(2) Know your contract terms before you sign any contract to purchase real estate. Your lawyer can help answer any questions you have about any aspect of these terms. You'll want to be sure you understand all the implications of what you are signing.

(3) Know the total cost. The reason this is important is financing fees, documentary tax stamps and recording fees. Before making a decision on spending your money, you obviously want to know exactly what a property is going to cost you.

(4) Find out how your property can be used. Investigate the zoning. You may find a property can be used for short-term rental, for example, a factor giving it added value. Conversely, you might find zoning limitations that could make your property less valuable.

(5) Get the best financing available at the lowest and best rate. Shop around for financing. You'll find that both interest rates and deposit requirements vary. Shopping around is always good advise but in this case it is even more important because there are many choices and you will want to find the best one possible for your situation.

(6) Know your legal rights before you buy anything. Taxes, possible uses of a property and immigration laws in conjunction with buying property in Florida are all key issues for your successful land acquisition. Your lawyer can acquaint you with details on all these issues.

(7) Consult with and obtain the advice of professionals, such as your lawyer, your accountant and your banker. This might be the most important advice you will receive.

BUYING A HOME IN FLORIDAThe first legal step in purchasing a home if Florida is

generally the preparation of the real estate contract by the real estate broker and the signing of the same by the prospective buyer with a deposit, usually paid by the buyer and held by the real estate broker or lawyer in an escrow account. This is the most important step in purchasing a home in Florida. The details of the real estate contract will determine what you can buy and how you buy it. Before you read the contract, you should discuss it carefully with

your attorney. In Florida, the Florida Association of Realtors and the Florida Bar have prepared a standard contract for the sale and purchase of houses. Beware if the broker or seller does not use this contract!

This contract for sale and purchase sets forth the legal description of the property and sets forth the time that it must be accepted by the seller and the terms for financing. The contract will also provide that the seller shall prove that he owns title to the property and then sets forth a date when the buyer and the seller exchange deeds and monies. This is called the closing date.

The contract also sets forth any restrictions for the use of the house and any other types of special clauses.

In Florida, title is usually given as fee simple. If a husband and wife purchase the property together, they own it as joint tenants and upon the death of one, it automatically goes to the other without need for probate. There can be tax consequences, however.

The contract for sale and purchase of homes in Florida also contains what obligations are those of the seller and what obligations are those of the buyer, with respect to surveying, termite inspection, repairs, proof of title, expenses, taxes, inspection repair and maintenance and risk of loss. The contract also sets forth the closing procedures and the requirements for escrow and the duties and obligations for failure to perform.

Once signed, the Florida contract for sale and purchase is binding upon both seller and buyer. The seller is not allowed to sell the property to someone else while the contract is in force.

Before signing the purchase agreement, you should discuss with your lawyer questions such as:

(1) What land and buildings and furnishings are included in the contract. For example, are the stove, refrigerator, automatic dishwasher, drapes and carpet included?

(2) Who pays for examination of the title and the inspections?

(3) Have all utilities been installed? Who pays for the deposits on the utilities?

(4) Who pays for the surveyor? Who is responsible for obtaining the surveyor?

(5) If a mortgage is to be given, who will pay the tax on the mortgage and the other costs of the closing?

(6) If a loan is to be obtained from a lender, who will pay the cost of obtaining the loan?

(7) Who will pay the cost to repair if there is termite

damage?(8) What are the zoning regulations or restrictions on

the use of the property?(9) What are the remedies if the buyer or the seller

defaults?(10) Should the purchase be contingent on any other

matters, such as, the sale of your current home?These are questions that you and your lawyer should

answer before signing the contract.TAKING TITLE TO PROPERTY

In Florida, a standard warranty deed is the general means of conveyance of title. The usual guaranties or warranties by the seller are good title and freedom from encumbrance is against all other persons. A deed is not a substitute for title examination. Generally speaking, quit-claim deeds, special warranty deeds and agreements for deeds should be avoided. Attorneys are authorized to do title transfers and may be title agents. Your attorney should be a title agent with a well known title insurance company.

CONVEYANCINGMost conveyancing in Florida is done through what is

called a title company. Under Florida law, a title company examines the public records to insure that the seller owns the property. Once the examinations are made, the title company will issue a commitment which is its agreement to insure the property against all others who may make a claim to it with the exceptions stated in the title policy.

Some lawyers are also title insurance agents and can examine the abstract or can do a title examination to ensure that the seller owns the property as claimed so that a title policy can be issued. South Milhausen has a title company, Alliance Title, which does both residential and commercial closings.

Your lawyer, representing your interest, can advise the extent of protection given to you by your owner's policy. There is usually a separate charge for a title insurance policy.

COST DISCLOSUREU.S. law allows the buyer to request a disclosure of all

costs of purchasing a house or real property. You can obtain this from the real estate broker at the time that he prepares the contract for the sale and purchase. Sample costs include attorneys fees, required escrow account balances, hazard insurance, recertification of abstract survey expense, title insurance, the transfer fee on existing mortgages, appraisal fees, termite inspections fees, credit report fees, documentary stamps on a promissory note, intangible tax on

new mortgage, attorneys fees from the mortgage company, pre-payment of taxes and insurance for an escrow account, service fees and recording fees. Who pays the types of fees is negotiable.

JOINT OWNERSHIPSFlorida allows buyers to purchase property in joint

ownership. When a husband and wife buys together this is known as a joint tenancy by the entireties. You and your lawyer should determine the income, gift and death tax consequences before having your home placed in joint ownership. If joint ownership is held other than as husband and wife, it becomes a tenancy in common which may have other complicating legal concerns.

PURCHASING A HOME UNDER CONSTRUCTIONIf you are buying a home which is under construction, or

has been completed recently, special care should be taken to be sure that all the costs of construction have been paid by the sellers and that you are protected. Florida has a law which protects those who have not been paid in the construction of homes. Failure to comply with the law could result in paying twice for the house! You should consult your lawyer for full information as to your rights and responsibilities under this law.

If you are entering into an agreement to construct the house, this will be a totally different contract than a contract to purchase an existing home. Again, you will need to see your attorney to be sure that the contract is properly prepared.

FINANCING YOUR HOMEMany financing arrangements are available to nonresident

aliens in Florida. Generally, a deposit of approximately 30% will enable the nonresident alien to purchase homes in Florida and to obtain a mortgage and financing. Your attorney can help you determine the most advantageous plan and types of financing based on your needs and your capabilities to repay. Your attorney can also discuss with you certain tax advantages appropriate to your personal financial situation.

Regardless of the type of mortgage you obtain, you should be aware of prepayment penalties, the limitation of your right to sell without the lender's consent, the required maintenance of insurance for the mortgage company, tax and insurance escrow payments required, collateral rights to borrow from another source, limitations on the use of your property, and your lender's right to change interest rates if you assume an existing mortgage or if you obtain an adjustable rate mortgage.

CLOSING YOUR PURCHASEClosing a real estate sale is a technical and complex

operation which requires careful and detailed preparation.As a careful buyer, you should insist that your lawyer

conduct the closing or be present at the closing, checking each and every detail. He or she knows which points are significant in making the purchase so that you will have a trouble-free ownership to which you are entitled.

PURCHASING THE CONDOMINIUMA condominium is a special legal concept allowed by the

State of Florida that enables a group of persons to individually own a house or an apartment or flat outright while owning the land upon which the homes or apartments are built in common as a group. The expenses associated with common ownership are shared on a prorated basis. Usually the land and all the common facilities in the condominium, such as swimming pools, tennis courts, lobby's, plumbing and wiring are owned and operated by the owners through their condominium association. The joint ownership and operation means that no individual owner has control over common areas.

When you are purchasing a condominium, Florida law requires that you be given various documents called a disclosure statement or prospectus before you are obligated to purchase.

Florida law also provides for a cooling off period.Before purchasing your condominium you should know

whether you can rent it out on a short-term basis which is usually any period less than six months. You should also determine if the condominium restricts the number of visitors or pets you may have and other types of furnishings you are allowed in your apartment. You should also determine if there are any other mandatory membership fees and maintenance fees or other restrictions on use or ownership.South Milhausen also has lawyers involved in condominium law and community association(homeowners associations)law to help you in buying your condominium.

PURCHASING A TIME SHARE OR INTERVAL OWNERSHIPPurchasing a time share or interval ownership can also

be a rewarding experience or one fraught with perils. Even though the amount of money generally spent for a time sere or interval is substantially less, if does have many legal pitfalls of which you should be aware. Again, your attorney can advise you of your legal rights when purchasing a time share or interval ownership in Florida, including your rights to have disclosure statements, and other documents provided to you as required by law, as well as advising you of your legal obligations if you default in your payments and your

legal rights to resell the same.

FLORIDA PROPERTY TAX CONSIDERATIONSAll land and buildings in Florida are generally taxed on

an annual basis. This type of tax is called an ad valorem tax. The tax statements are generally sent out on November 1 of each year. The tax is computed as a rate based n the value of the property on the preceding January 1. The tax bill for the prior year is generally disclosed prior to or at the time of closing.

Florida does not have a personal income tax as many other states do, but does have a corporation income tax.

A nonresident who owns and leases real estate in the U.S. is subject to U.S. taxes and normally is a calendar year tax payor. Nonresident aliens who sell their properties in Florida will be subject to tax on their profits. United States tax laws requires that the person who purchases from a nonresident alien withhold 10% of the gross sales tax and submit it to the Internal Revenue Service unless a smaller amount is showed to be due. Nonresident aliens are not permitted to file a joint tax declaration and must file separate income tax returns.

Florida has also a tangible personal property tax on tangible property, which is used in the rental home or used in the business.

If you engage in short-term rentals of your Florida properties, you may be required to register the same with the State of Florida and to collect sales, use and tourist development taxes. You should consult your attorney before deciding to purchase a property for use as a short-term rental.

Estate taxes are assessed against nonresident aliens who live in the State. Careful estate and tax planning is usually required before deciding to purchase or reside in Florida. Again, your U.S. attorney should work carefully with your English solicitor for pre-residency estate and tax planning.

There is, however, a tax treaty between the United States and the United Kingdom which was designed for the purpose of avoiding double taxation. The Treaty sets out various rules to determine in which country the individual is considered domiciled so as to avoid double estate taxes. There are complicated legal rules for making these determinations. Planning for investments in Florida should be done between your U.S. lawyer and your U.K. solicitor. There are ways, however, in which ownership can be put in various off-shore trusts to avoid necessary taxes. Again,

discuss this with your solicitor and your U.S. lawyer and your U.S. and British accountant.

BENEFITS OF FLORIDA RESIDENCYAn individual may qualify as a resident of Florida

without obtaining U.S. citizenship. An appropriate U.S. visa is required for this. Once the appropriate visa category status is obtained, an international resident can file a declaration of domicile. Florida residents have a number of advantages and benefits given to them by law, including preference in state or county employment, a $25,000 homestead exemption in calculating an assessment for ad valorem taxes, free education through the 12th grade, lower tuition at State universities for children, qualification for various fishing and hunting licenses and no personal State income tax, and generally speaking, no estate and probate tax.

Buying property from abroad is a long-standing tradition in the U.S. The U.S. encourages foreign ownership and does not prohibit foreign currency exchanges. The British pound sterling still remains very strong against the U.S. dollar. Many buyers have been highly successful in it. But there are pitfalls and there can be problems. By abiding by the above rules, you will go a long way toward ensuring that your Florida property purchase is prudent and profitable.

Mr. Lavigne is a partner with the Florida based law firm of South Milhausen, P.A. The firm has represented many British buyers of Florida homes and businesses. The firm is a full-service law firm handling all aspects of international business, property law, business law, foreign investments, tax law, contract law, probate, estates, trusts, company law and immigration law. The firm issues title policies through its company, Alliance Title. One of Mr. LaVigne’s areas of specialization has been in the area of compliance with U.S. immigration laws for those who want to live and work in the U.S. The firm is a long-standing established member of the Orlando business and legal community.

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