Real estate closing costs are fees paid by borrowers to their lender, by buyers and sellers to a governmental subdivision, by either party to vendors and to title insurers.

When calculating the costs related to a real estate transaction, it is important to be aware of these costs because they can be significant.

With the average home in March 2022 selling in Coral Gables, FL in the Miami area for $1,147,288 the fees associated with a sale of that size can be viewed from the point of view of the seller, buyer or from a buyer who is borrowing via a mortgage.

Title Insurance

Title Insurance, based on standard rates in the State of Florida, is likely to be $5,350 for a $1.1M home. This includes a nominal extra amount to issue two policies, one that covers the lender’s risk and the other that covers the property owner. Unlike many other areas in Florida, in Miami-Dade County and Broward County in the State of Florida, the cost of title insurance is typically covered by the buyer. However, this is not a hard and fast rule and there are some exceptions. The buyer can negotiate in some circumstances to have the seller cover this expense.

In addition to the base cost of a title insurance policy, there are additional so-called title endorsements that can be added, each costing an additional fee. Title endorsements provide additional coverage for a wide range of situations. Some lenders make certain title endorsements mandatory and others may be purchased at the discretion of the property owner. An example of a title endorsement is an endorsement for easements and encroachments. This addition to a title insurance policy protects the property owner against damages if there is an encroachment or easement judgment that results in the removal of some or all of the owner’s property. If for example a gazebo in the backyard of a house must be torn down because the land it is on is judged by a court to be on a neighbor’s property, then an encroachment endorsement will cover the loss.

Other title endorsements may include similar risks of damages due to another party having access to drilling rights on a property owner’s land and other similar situations. Typically, in Florida, a title endorsement can be added to the policy for a nominal fee (usually $25) or for a percentage (usually 10%) of the base premium of the policy.

“Unlike many other areas in Florida, in Miami-Dade County and Broward County in the State of Florida, the cost of title insurance is typically covered by the buyer.”

Settlement Fee

A settlement fee is typically paid to the company that holds the transactional amounts in escrow. Exactly who pays this fee can be negotiated between the seller and the buyer. In the current seller’s market in Miami-Dade and Broward Counties, it is most common that the settlement fee is covered by the buyer. The settlement fee for the Coral Gables property in the example above is likely to be $800.

Recording Fees

Typically paid for by the buyer, recording fees are stipulated in Florida Statute (§28.24(12)(a,b,d,e), §24.222(3)(a). According to statute, mortgage recording fees are based on a percentage of indebtedness and deed recording fees are based on a fixed per-page rate. All together these fees are likely to be an additional $250 for the $1.1M property in Coral Gables, FL in Miami-Dade County.

Land Survey and Elevation Certificate

While vendors’ prices vary, the cost for this component of the closing costs is likely to be in the region of $400.

Documentary Stamp Taxes

There are three documentary stamp taxes that are applicable for Florida transactions. These include a stamp tax on deeds, a stamp tax on mortgages and an additional stamp tax on promissory notes.

In all Florida counties except Miami-Dade, the tax rate imposed on Deeds is typically an expense of the seller. Applicable deeds may include any of the following:

warranty
special warranty
quitclaim
trustee’s deed
life estate deed
transfers of property deeds between spouses etc

The stamp tax on deeds in Florida is typically $0.70 on each $100.00 or portion thereof of the total consideration (See, Fla. Stat. §201.02(1)(a), §201.031). But in Miami-Dade County, the tax rate is $0.60 cents on each $100 or portion thereof plus a surtax of $0.45 cents on each $100 or portion thereof if the property is not the primary residence of a single-family. Assuming that our Coral Gables home selling for $1,100,000 is a primary residence of a single-family unit, the surtax would not apply. The seller would be required to pay $6,600.00 in documentary stamp taxes.

The buyer/borrower customarily pays the mortgage documentary stamp tax and the promissory note documentary stamp tax. These are contingent on the amount borrowed and are also outlined in Florida statute.

Fla. Stat. §201.08(1)(a) defines the documentary stamp tax on promissory notes. According to statute, the tax would be calculated at a rate of $0.35 cents per $100 or portion thereof, with the maximum tax being $2,450 on any given transaction. The maximum corresponds to a promissory note of $700,000 or above. It is not unlikely that this amount or more may apply to the example transaction of the $1.1M house in Coral Gables, FL.

Fla. Stat. §201.08(1)(b) is the statute that defines how the documentary stamp tax on mortgages works. This tax is also calculated at a rate of $0.35 cents per $100 or portion thereof. The difference is that there is no maximum tax amount.

The Importance of a Closing Attorney

The State of Florida does not require an attorney to be present at real estate closings. However, because real estate transactions are complex, it is highly recommended that attorneys be present to ensure that each party’s best interests are represented. A closing attorney coordinates the various components of a real estate deal to ensure that the transaction takes place legally and smoothly. Typically, the buyer and seller of a transaction will be represented by their own separate attorneys. It is not uncommon for a lender to also have legal representation in a transaction by their own real estate attorney.

The following tasks are typically conducted by real estate attorneys representing the various parties to a transaction:

Preparing Closing Documents
Conducting Title Search
Obtaining Title Insurance
Selecting The Closing Date
Reviewing Closing Documents
Distributing Funds
Handling Additional Requirements

(including homeowners insurance and warranty information, homeowners association (HOA) fees and home inspection reports)

South Florida Law

In addition to being a full-service real estate law firm that can support property closings, South Florida law is also a title insurance agency. This makes South Florida Law a one-stop-shop for all of your real estate transaction needs.

Your home may be your most financially valuable asset – so it makes sense to ensure that it is insured. In addition to insuring your home and its contents, are you prepared for any items related to past ownership of the property? These issues affect your title and can threaten your ownership of the property and/or your financial position. South Florida Law, PLLC specializes in conducting title searches on the part of buyers and lenders to ensure the smoothest transaction possible.

South Florida Law, PLLC attorneys have years of experience in handling title matters and facilitating successful real estate transactions. Having our attorneys at your side in a residential or commercial property transaction gives you the advantage of proactive legal protection.

If you are looking for a real estate closing attorney or a title insurance agency, call us today on (954) 900-8885 or reach out to us via our contact form.