1. Deeds without estate status: So you want to add dad, mom or a brother to your Florida property, so you get a Quit Claim Deed from an out of state lawyer, an office supply store or online, fill it out and mail in to be recorded. Three years later they die, and when you go to sell you discover that in order to clear their interest you will need to file an ancillary administration in Florida. $3,000 and a few months later you close and get to share the proceeds with their heirs. This can all be avoided by using the proper language to effectuate what your intent is on that deed. If you want the property to go to everyone’s heirs, do nothing, but if you want to be sure that the property goes to the surviving grantees, simply add, “joint tenants with full rights of survivorship, and not as tenants in common” after the grantee’s name and upon their death, the title goes to the remaining grantee without probate.
2. Grandma’s Condo: If you own a second home/condominium in Florida and are a resident of another state, you can avoid two probates by simply deeding your second Florida property to yourself for life with a remainder to your chosen heirs. Then, when you die, no probate is necessary. You can even keep full control by adding Ladybird Powers to your Life Estate Deed.
3. Applying for Homestead: Florida’s constitutional homestead is an automatic protection arising as soon as you take residency of your Florida home. However, the statutory homestead tax break requires that you apply by March 1 of the year after you purchase. Forgetting to apply will costs you about $500 each year, and you will lose a 3% cap on annual appraisal increases. If you closed last year and did not apply, you can still submit an application and ask for a late filing waiver.
4. Home Improvements: Getting ready to sell your house but need some work done that requires a contractor? If it is a short job, you should change the automatic one year life of that Notice of Commencement required for permitted jobs to the actual time needed to complete the work. Otherwise, when you do sell you will have to hunt down that contractor and possibly some subcontractors to get release of liens, even though the job was done on one week and it has been eleven months since your house improvement was completed.
5. Loan Payoff Surprise: Many people are surprised at closing when their mortgage payoffs are far higher than their last mortgage statement. For example, if you borrowed $500,000 at 5% five years ago, and you are closing August 10, (and you were told not to make the August mortgage payment) and your August mortgage statement says you owe $448,866.09 in principal, your closing statement could say you owe almost $3,000 more. That is because mortgages are paid in arrears, meaning that the July payment you made was for interest in June. So at that August 10th closing they are collecting interest on the principal balance from July 1 to August 10, plus a week extra to cover mailing in the payment.
6. Mortgage Insurance: Did you purchase your home with less than 20% down? Then you probably pay mortgage insurance every month. The insurance is supposed to stop once the loan amount equals 80% of your home’s appraised value. However, it is the owner’s responsibility to request this relief. If you think you have hit 80% mark, contact your lender, because each month you delay could easily costs $83 per month for each $100,000 you borrowed.
7. Rubber Hoses: Go in your laundry room and look at the hoses connected to your washing machine. If they are black rubber then (i) confirm you have flood insurance; and (ii) get in the car and go to Lowes or Home Depot and buy braided stainless steel hoses in the same length. Installation is easy, turn of the water to the washing machine, remove old hoses and install new hoses. Burst rubber hoses are probably the number one cause of flood in homes. You do have flood insurance too? Many do not so take the time and do one of the easiest fixes possible to protect your home.
8. Mortgage Interest: Do you know what interest rate you are paying on your home mortgage? Many people close on a loan when they buy and then never refinance, throwing away thousands of dollars. If you borrowed $300,000 ten years ago at 6% you are paying $1,798 a month. If you refinanced all $300,000, that full amount at today’s rate of 3.75% your payment would drop to $1,389 and after closing costs you would have about $40,000 in your pocket. The smartest move would be to refinance only what you owe for 15 years. Your payment would still be lower by $300 a month and you would shave another five years on your existing loan.
Michael J Posner, Esq., is a partner in Ward Damon a mid-sized real estate and business oriented law firm serving all of South Florida, with offices in Palm Beach County. They specialize in real estate law and business law, and can with these and other real estate mistakes (except the plumbing tip!). They can be reached at 561.594.1452 or by e-mail at firstname.lastname@example.org