Different states within the US have specific laws that govern the workings of real estate transactions conducted within their borders. These laws mostly dictate things such as the property documents sellers are mandated to provide, property tax rate, title lien searches, title insurance rates and closing costs payments.
Title insurance and closing costs are a constant and important aspect of every real estate transaction. Typically, both the seller and buyer are responsible for footing the costs that come with these transactions. Thankfully, however, these costs are usually split between both parties to ensure no one party has to bear too much of a burden.
Title Insurance in Florida
Title insurance is a payment that ensures that a buyer’s finances are protected against any loss in case a claim against the true ownership of a property arises due to fraud or forgery on the part of the seller, or other problems that were not revealed during the title search.
Who Pays Title Insurance in Florida?
In Florida, the party responsible for paying title insurance varies from one county to another. This means that the county within which the property for sale is located determines whether it is the buyer or seller that pays for the title insurance.
In most counties within Florida, the seller pays the title insurance fee. In the following counties however, the duty falls on the buyer to pay the title insurance fee:
- Collier county
- Miami-Dade county
- Broward county
- Sarasota county
Both parties should note however, that the law does not make it customary for any one party to pay this fee. This means that while one party might typically be expected to pay the title insurance fee, both parties can choose to negotiate and decide in the sales contract who should foot the bill instead.
How Much Does Title Insurance Cost in Florida?
Title insurance, unlike other types of insurance, is only paid one time. In Florida, the cost of this one-time payment is determined by the state government and is calculated based on the purchase price of the property.
Here is a breakdown of how it works:
- If a property has a purchase price of up to $100,000, the title insurance fee costs $5.75 per thousand dollars
- If a property has a purchase price of over $100,000, the title insurance fee costs $5.00 per thousand dollars
Following the breakdown above, if a property goes for $300,000, the title insurance fee would cost a total of $1,500.
Closing costs in Florida
Closing costs are financial expenses incurred while closing on a real estate transaction. These costs include realtor fees, property taxes, title search, title insurance, and much more. Closing costs are usually paid by buyers and sellers alike, and are unavoidable in any real estate transaction.
Who Pays Closing Costs in Florida?
In Florida, like in most states, the sellers pay a huge chunk of the closing costs, while buyers take care of the rest. Let’s take a look at different closing costs, and the parties responsible for paying them.
Closing Costs for Sellers
Here are some of the most common closing costs paid by sellers in Florida:
Title Search
A title search establishes the ownership of a property and is carried out by a title search company. This company is in charge of a property’s public records in search of any claims, judgments, or liens that might make the property unmarketable.
Documentary Stamp
This is a fee charged by the state of Florida to cover the transfer of a property from the seller to the buyer. In other states, it is known as a transfer tax. In Miami-Dade county, this costs $0.60, and a surtax of $0.45 on every $100 of the sales price. In other counties outside of Miami-Dade, transfer taxes cost $0.70 on every $100 of the sales price.
Broker Fees
Broker fees usually constitute a whopping 6% (3% for the listing agent and 3% for the buyer’s agent) of the sales price, all to be footed by the seller. However, this is only applicable if either the seller, buyer, or both of them make use of real estate agents in selling/buying the property.
Closing Costs for Buyers
Buyers generally bear a smaller part of closing costs than sellers, and here are some of the most common of them:
Appraisal Fee
Most lenders usually want to carry out an appraiser of the property to determine its value before setting up the buyer’s mortgage. To do this, a professional appraiser has to be hired, and the cost of this has to be footed by the buyer. It typically costs between $300 to $500.
Property Inspection Fee
Before paying for a property, buyers need to carry out a thorough inspection of said property to ensure that there are no hidden problems with it. This fee would average between $200 and $400.
Loan Origination Fee
This is charged by the lender to cover the costs of opening a mortgage account. It usually costs about 1% of the mortgage amount. Note that this is only applicable to buyers who make use of lenders to finance the purchase of the property.
How Much Are Closing Costs in Florida?
In Florida, closing costs cover an average of 8-10 percent (including realtor fees) of the property’s sale price. This makes it number six on the list of states with the most expensive closing costs, ranking just a little below New York, Washington, and Pennsylvania.
There are a few factors that affect the total amount spent you might have to spend on closing costs. Some of them are:
- Type of property
- Size of property
- Location of property
- Price of property
Conclusion
Title insurance is put in place to protect buyers, as well as their lenders, against financial loss while buying a real estate property. One thing to do before paying for a title insurance is to ensure that a comprehensive title search has been carried out by a reputable company. This might cost a pretty penny, but it quite important to safeguard the interests of both parties involved in the transaction.
