40 Year Listing Agreements?

Florida’s Attorney General Files Suit. Two (2) months ago, Florida’s Attorney General filed a forty (40) page lawsuit against MV Realty, PBC, LLC under Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA). 

The Complaint alleges a Florida licensed real estate brokerage, headquartered in Delray Beach, would offer to pay consumers between $300 to $5,000 in exchange for a forty (40) year exclusive listing agreement appointing MV Realty as the consumer’s exclusive real estate agents; but that’s not all. 

Allegations in the Complaint. The AG claims that both MV’s trade practices, in getting lower income property owners, senior citizens, and non-native English speakers to sign MV’s agreements, and MV’s agreements themselves were collectively deceptive, unfair, and unconscionable in violation of Florida law in the following ways: 

  • MV recorded over 9,000 short form “Memorandums” summarizing the essential terms of their forty (40) year listing “Agreements” in county public records;
  • The recordings constituted a cloud on title encumbering the properties, acting like a forty (40) year lien against homeowner properties;
  • Homeowners were handtied from being able to refinance, obtain a reverse mortgage, HELOC, credit line, or otherwise use their home equity without first paying MV a 3.00% penalty to remove the recording;
  • If during the next forty (40) years the property was sold using another brokerage, gifted, lost in foreclosure, sold by owner, transferred at death, sold by the consumer’s heirs using another brokerage, or transferred in any way whatsoever without MV being paid its commission, then MV would be entitled to 3.00% of the property’s value;
  • The Homeowner’s five year statute of limitations to sue MV were contractually shortened to only one year; and
  • Lastly, and probably most problematically, is MV’s damage clause.  Under MV’s  agreement, charging 3.00% of the property’s value is illusory because the Agreement allows MV to determine the property’s value.  Additionally, requiring a consumer to pay the full 3.00% commission without MV reducing that amount by their cost savings for not having to actually do any listing services is very likely an unenforceable penalty; because MV would be placed in a better position than if it actually had to work for the 3.00% commission.

Realtor Liens. While the AG concedes that Florida recognizes different types of liens such as: Statutory liens (i.e. those permitted by Florida Statute or law); Judgment liens (i.e. those permitted as a result of a party securing a judgment against a debtor); and Consensual liens (i.e. those voluntarily permitted by a debtor against the debtor’s property), the AG believes that the consensual liens created by the 40 year Agreement signed by the consumers are all invalid.    

In citing to Florida Statute §475.42(1)(i), the AG claims that it is a 2nd Degree Misdemeanor, meaning a crime, for “A broker or sales associate [to]  place, or cause to be placed, upon the public records of any county, any contract, assignment, deed, will, mortgage, affidavit, or other writing which purports to affect the title of, or encumber, any real property if the same is known to her or him to be false, void, or not authorized to be placed of record, or not executed in the form entitling it to be recorded, or the execution or recording whereof has not been authorized by the owner of the property, maliciously or for the purpose of collecting a commission, or to coerce the payment of money to the broker or sales associate or other person, or for any unlawful purpose.”[1]

Possible Realtor Defenses. However, to MV’s point, Florida Statute §475.42(1)(i) also says, “nothing in this paragraph shall be construed to prohibit a broker or a sales associate from recording a judgment rendered by a court of this state or to prohibit a broker from placing a lien on a property where expressly permitted by contractual agreement or otherwise allowed by law.”

Although the civil court docket shows MV has not filed any defenses to the lawsuit as of yet, it is anticipated that MV might claim that the AG’s office lacks jurisdiction to pursue MV.  Florida Statute §501.212(6) states that “This part (i.e. Florida’s Deceptive And Unfair Trade Practices) does not apply to: An act or practice involving the sale, lease, rental, or appraisal of real estate by a person licensed, certified, or registered pursuant to chapter 475, which act or practice violates s. 475.42.” 

Moreover, to MV’s credit the lawsuit also states then when consumers wanted to refinance their properties, MV would usually agree to subordinate their lien and allow the consumer’s Lender to take first position and priority over MV’s lien.  The AG adds however that on occasion MV has also refused, particularly when MV believes that the consumer is trying to strip all the equity from the property leaving nothing for MV.  

Fines, Fees, & Penalties demanded by the AG. Finally, the AG’s suit asks the Court to award civil penalties in the amount of $10,000 per violation or $15,000 if a senior citizen is involved, reform MV’s contracts to strike the unreasonable clauses, disgorge all ill-gotten gains to reimburse the purported victims, grant injunctive relief from causing any further injury to the public and from engaging in the same conduct in the future, plus award attorney fees, and costs of suit.

Since the filing of the AG’s lawsuit, a review of the public records reveals that MV has been actively removing the clouds it placed on homeowner titles by recording countless “Terminations” of MV’s  Memorandums.   Notice that I said termination of the “Memorandums.”  It does not appear that MV has gone so far as to expressly terminate the actual “Agreements.”  The Termination of Memorandums state that, the “Property … is released from the … encumbrance….” Nothing therein actually releases the individual consumer from still being sued for breaching the contract.

MV’s Statement to ABC News. MV released a statement to ABC news which is also following the story, which in part reads: “Recently, our Company became aware of a complaint filed by the Florida Attorney General. Our attorneys are currently reviewing it. We are confident that after a full airing of the facts, the Florida Attorney General will find that MV Realty’s business transactions are legal and ethical and that our team has operated in full compliance with the law. We look forward to and are fully committed to working with the FL Attorney General’s office to regulate these transactions.”

Legislative changes – NTRAPS.   The American Land Title Association (ALTA) represents the title insurance industry and has drafted a model bill prohibiting  NTRAPS (Non-Title Recorded Agreements for Personal Services).  NTRAPS are documents filed in the property records to provide notice to anyone looking to buy property that the owner has agreed to a future service relating to the property in exchange for receiving upfront money.  Regardless of what these agreements are called, they are recorded even though they do not constitute a real property interest. NTRAPS are agreements recorded in property records and purport to run with the land, binding future successors and adding cost, complexity and barriers to transferring or financing their property.

Notwithstanding, it is ALTA’s position that “Real property covenants should touch and concern the land.  Non-Title Recorded Agreements for Personal Services (NTRAPS) in and of themselves DO NOT create a valid interest in real estate. Treating these agreements as real property covenants erodes the certainty of property rights and unreasonably restrains transferability. … Property recordings should be limited to documents legitimately affecting the title to real estate.”

Accordingly, ALTA has drafted model legislation prohibiting the recording of service agreements against consumer’s real estate.

DISCLAIMER:  The foregoing are allegations by the AG and have yet to be proven. 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] Chapter 475 does allow for liens for commercial realtors but they are limited.  See, Fla. Stat. §475.703 – Broker’s lien for sales commission (providing for lien against net proceeds as being against personal property, but not against the real estate), and Fla. Stat. §475.803 – Broker’s lien for leasing commission. (providing for lien against either the landlord’s interest in the commercial real estate or the tenant’s leasehold estate).

How To Buy Properties with Cryptocurrency

In this article, I interviewed crypto-lender Milo, because it is locally headquartered in Miami, was a featured speaker at the Miami Association of Realtors’ 2022 Global Congress at the Biltmore Hotel in Coral Gables last month, closed over $100 million in loans including those for foreign nationals residing in over 90 countries around the world; thereby bringing more buyers to Florida.[1]

Crypto Basic Terms?

  • Fiat.  “Real currency” such as coin and paper money of the United States or a foreign county issued by a government’s central bank.
  • Cryptocurrency.   The IRS uses the term “virtual currency” which is a digital representation of value, other than a representation of the U.S. dollar or a foreign currency (“real currency”), that functions as a unit of account, a store of value, and a medium of exchange.  Some virtual currencies are convertible, which means that they have an equivalent value in real currency or act as a substitute for real currency.  It is called cryptocurrency because cryptography is used to secure transactions that are digitally recorded on a distributed ledger, such as a blockchain.
  • Wallet.  A crypto wallet is a place where you can securely buy, sell, transfer, and keep your crypto.  To set up a wallet, (1) Choose a platform you trust (e.g. Coinbase; I use MetaMask, but that only works with Ethereum based tokens); (2) Download the app; (3) Fill out the questions and associate your personal [NOT BUSINESS ACCOUNT– it will not work] banking account with the Wallet; (4) Start buying, selling, or exchanging crypto; and (5) Be sure to write down your private security key, because if you lose or forget it you won’t be able to access your crypto.
  • Transaction Fee, Exchange Fee, Network Fee, Wallet Fee, or “Gas.”  Fee incurred when buying crypto, selling crypto, or sending crypto from one wallet to another.  Ethereum uses the term Gas. 

What is a Crypto-Loan or Crypto-Backed Mortgage?  A crypto-loan is a type of secured loan in which a borrower pledges two (2) types of their personal collateral in exchange for obtaining a cash loan from a crypto-lender.  It’s a great way for a borrower to obtain a loan, without actually having to sell (i.e. liquidate) their crypto; the advantages of which will be discussed in more detail infra

The two (2) types of collateral which the crypto-borrower needs to pledge to the crypto-lender are: (1) The borrower’s cryptocurrency (usually equal to at least 100% of the dollar amount of the loan); plus (2) Allow the crypto-lender to also place a mortgage on the real estate which the borrower seeks to either acquire or refinance (usually equal to 65-70% of the cash loan amount).  Furthermore, in exchange for obtaining cash from a crypto-lender, the crypto-borrower must also pay back that loan in monthly installments to the crypto-lender.  The loans are typically interest only loans, and at this time run between 9.00%-10.00%.  As long as the borrower timely makes its monthly interest payments and repays the loan amount in full to the crypto-lender, then the borrower will be entitled to have all of the borrower’s crypto returned at the end of the loan term. 

How much do I pay, and how do I pay each month, on my Crypto-Backed Mortgage?  By way of example, in exchange for a crypto-borrower receiving a $1,000,000 loan, the crypto-lender would receive from the crypto-borrower: (1) a 2.00% Origination Fee which would equal $20,000 in this hypothetical; (2) An interest only promissory note at 9.00%-10.00% per annum, which the crypto-borrower must make monthly cash payments to the crypto-lender; (3) $1,000,000 of borrower’s crypto transferred into the crypto-lender’s “custodial account” as security for repayment of the loan; plus (4) A mortgage placed on borrower’s real estate at 65-70% of the loan amount meaning the recorded mortgage would be in the amount of either $650-700,000.[2]  

So as you can see, the crypto-lender becomes oversecured to the tune of 165-170% (i.e. 100% of the loan amount (by holding the borrower’s crypto) plus 65-70% (by placing a mortgage on borrower’s property).       

Step-by Step process to getting a Crypto-Backed Mortgage?  Milo has an online process to apply for a crypto-loan from anywhere in the world. 

Speed to Close Loan?  2-4 weeks; with the biggest hold up being obtaining the appraisal.

Interest Rates for Crypto-Backed Mortgage?  As of the time of this article interest rates are around 9.00%-10.00% based on a 30 year fixed.

Origination Fee for Crypto-Backed Mortgage?  As of the time of this article, origination fees are 2.00% of the loan amount.

Dollar Limitation for Obtaining a Crypto-Backed Mortgage?  Up to $5,000,000 with the opportunity to loan more subject to prior approval says Milo.

What Type of Cryptocurrency is AcceptedMilo accepts Bitcoin, Ethereum, and USDC Stablecoins.

Property Use Limitations (i.e. Residential, Commercial, Agricultural, Construction, Vacant Land)?  According to Milo, loans are predominantly for properties zoned residential. Commercial loans are not customarily done but may be a potential in the future.  Agricultural, vacant land, and construction loans have not been done, but Milo is willing to entertain the possibility.   

Are Cash-Out Refinances Available?  Yes.  Same concept as a purchase.  Let’s assume a crypto-borrower wants to borrow $1,000,000 in cash (i.e. instead of the money going to a seller the cash is going to the borrower).  Once again, in exchange for a crypto-borrower receiving $1,000,000 in cash: (1) The Crypto-Borrower would pay off the existing mortgage on the property so there is no longer any third party mortgages on the property; THEN, the crypto-lender would receive from the crypto-borrower: (2) a 2.00% Origination Fee which would equal $20,000 in this hypothetical; (3) An interest only promissory note at 9.00%-10.00% per annum, which the crypto-borrower must make monthly cash payments to the crypto-lender; (4) $1,000,000 of borrower’s crypto transferred into the crypto-lender’s “custodial account” as security for repayment of the loan; plus (5) A mortgage placed on borrower’s real estate at 65-70% of the loan amount meaning the recorded mortgage would be in the amount of either $650-700,000.

Limitations on getting Title Insurance?  None. Because ultimately the seller is taking cash from the crypto-lender for the transaction. So as far as the seller knows, the transaction is just a normal transaction where some lender is paying the Seller off in cash.

Why is the Crypto-Lender so Oversecured?  Crypto is considered volatile — with the potential for significant upward and downward movements over shorter time periods.  Generally, the more volatile an asset, the riskier it is considered to be as an investment; and thusly, the more potential it also has to offer either higher returns or higher losses.  Accordingly, what starts out as the crypto-lender being oversecured by holding assets valued at more than the loan amount (i.e. crypto + mortgage valued at 165-170% of the loan amount), will most assuredly quickly change.

What if my Crypto goes UP in value?  If  the borrower’s crypto (which is being held as security by the crypto-lender) appreciates by at least 25.00%, only then will the crypto-borrower be entitled to have up to 25.00% of the crypto-borrower’s crypto back; but not before such time.

What if my Crypto goes DOWN in Value (margin-call, foreclosure)? Milo’s strike point is when the crypto depreciates by 65.00%.  If the crypto collateral being held in Milo’s custodial account goes down in value by 65.00%, then Milo will require the crypto-borrower post additional crypto or pay down the loan balance.

Keeping with a similar example as above, assuming Milo gave a $1,000,000 cash loan, then the crypto-borrower would receive a margin call if the $1 Million dollars worth of crypto goes down by 65% (i.e -$650,000), then Milo would require the crypto-borrower post additional crypto or pay down the loan balance.  To date, Milo claims to have never made a margin call.

Qualifications for an Individual to obtain a Crypto-Backed Mortgage?  Many crypto-lenders follow a best practices approach and conduct the same type of AML (“Anti-Money-Laundering”) due diligence that regulated financial institutions conduct.  Accordingly, Both the individual crypto-borrowers and then the crypto funds (addressed in the following section) are both scrutinized.

As to the individual crypto-borrower, the crypto-lender will conduct a KYC  (“Know Your Customer”) which is akin to a background check.   During a KYC, personal information is collected such as: (1) The customer’s full name, place, date of birth, and address; (2) the information is compared to their official government-issued identification, such as a passport or state-issued driver’s license, and proof of residence, such as a utility bill; and (3) The customer’s identity is compared against official databases such as Politically Exposed Persons (PEP) and  OFAC’s (Office of Foreign Asset Control) sanction list.

Sourcing of Income to Qualify for a Crypto-Backed Mortgage?   As to the crypto funds which the borrower plans to pledge as collateral, reputable crypto-lenders conduct a KYT, which means “Know Your Transaction,” on the funds.  KYT refers to the process of examining financial transactions for financial crimes, money laundering, terrorism financing, or other fraudulent or suspicious activities. 

* Who holds the Buyer’s Cryptocurrency once the Buyer obtains a Crypto-Backed Mortgage?  Milo says that the borrower’s crypto is held in Milo’s segregated “custodial account” which is parked at Coinbase.

* Where is the Buyer’s Cryptocurrency held once the Buyer obtain a Crypto-Backed Mortgage?  Milo says that the borrower’s crypto funds are held in their segregated “custodial account” which is located at Coinbase.  Coinbase is a secure online platform for buying, selling, transferring, and storing cryptocurrency.   However, in the eyes of a crypto-borrower, this is where risk may lie.  First, the account is operated and controlled by the crypto-lender.  Second, if a transfer were to happen within the custodial account holding borrower’s crypto, the borrower would never know, because the crypto-borrower does not receive alerts or status reports.  Rather, the borrower’s crypto currency is placed in the crypto-lender’s “custodial account” using blind faith, that it will never be prematurely accessed or used by the crypto-lender.  Third, if the value of cryptocurrency starts to drop violently, as it is prone to do, there is nothing the crypto buyer can do about it, since the crypto-borrower is not allowed to access the custodial account containing borrower’s crypto. 

* Risks of Crypto Loans?  (1) Crypto is volatile and if it goes down then the borrower cannot sell to stop-the-bleeding; (2) If the crypto goes down in value (under Milo’s terms by 65%) then the crypto lender may require the crypto-borrower to post additional security; (3) As part of a crypto-loan, crypto-lenders require their borrower to allow the crypto-lender hold the crypto-borrower’s cryptocurrency.  Cybercrimes, cyber-hacking, embezzlements, and lender bankruptcies are all high risks.  So if a borrower fully pays off their loan, the borrower is now going to want the crypto-lender to release and return the borrower’s crypto.  But, if the lender loses a borrower’s cryptocurrency due to a security breach or due to the crypto-lender going bankrupt or insolvent, there is no guarantee that the borrower will ever see their crypto again.  A good question to ask may be whether a crypto-lender has insurance against embezzlements, cybercrimes, and hacking; a subject which is discussed in more detail infra

* Is any part of my Cryptocurrency (which is being held by my Crypto-Lender during the life of my loan) FDIC insured?  No.  The FDIC has put out a statement that crypto assets are not FDIC insured.  The FDIC only protects money which depositors place in insured banks in the unlikely event of an insured-banks failure.  In such event, deposits are insured in the amount of at least $250,000. 

In contrast however, a borrower’s crypto being held by a crypto-lender is not FDIC insured.  This means that the crypto-lender may be unable to return the borrowers’ collateral and assets if there is a market crash or if the company experiences a large number of defaults on loans or bankruptcy. 

* How does the Buyer know their cryptocurrency is safe with the Crypto-Lender, and what options does a Crypto-Borrower have?  “Is the fox watching the henhouse?”  My biggest question is, whether a crypto-borrower’s crypto is really truly safe once they pledge it to the crypto-lender?   

According to Milo, during the life of the loan, the crypto-borrower’s crypto is kept in a separately designated “custodial account” at Coinbase for each crypto-borrower.  In other words, the crypto-borrower’s crypto is not commingled with any other crypto-borrower’s crypto.  However, although the account which holds the crypto-borrower’s crypto is parked at Coinbase, Coinbase does not act as an independent neutral party or decision maker on what to do with the crypto.  Rather, the “custodial account” holding all of the crypto-borrower’s crypto is completely under the control of Milo.   

When asked what assurances Milo provides the crypto-borrowers that their “custodial account” won’t be hacked or even raided by insiders, Milo says that it: has audits and licensure requirements by and from the NMLS, Oversight by the OCC, Reports to FinCen; has internal practices and controls; and has a Crime bond, E&O Insurance, and cyber insurance underwritten by Loyds of London which exceeds the amount of the loans it funds.  When asked, “For transparency reasons is Milo willing to share those insurance policies to their crypto-borrowers?”  Milo answered no.  Hopefully, that policy changes in the future.  

According to one insurance expert, since a crypto-borrower is really just relying upon the goodwill and name of the crypto-lender in the industry and nothing else, a savvy crypto-borrower would want to request the crypto-lender provide: (1) a Crime or Fidelity Bond – provides loss coverage for crimes like employee dishonesty, theft, forgery, alteration, robbery, burglary, counterfeit, computer and funds transfer fraud, and for property losses in the care, custody or control of the insured; (2) E&O Insurance provides coverage for Errors and omissions relating to claims of: Negligence, Errors in services given, Omissions, Misrepresentations, Violation of good faith and fair dealing, and Inaccurate advice; (3) D&O Insurance – provides coverage for those serving as Directors & Officers (D&O) of a company against claims relating to actual or alleged wrongful acts in managing a company such as: Breach of fiduciary duty resulting in financial losses or bankruptcy, Misrepresentation of company assets, Misuse of company funds, Fraud, Failure to comply with workplace laws, and Lack of corporate governance — Illegal acts or illegal profits are generally not covered under D&O insurance; and (4) Add the crypto-borrower as an Additional Insured  – which changes the claimants status to being able to file a claim directly with the crypto-lender’s insurance company.  

Why do all this?  Why not just sell my crypto, convert it to cash, and then buy the Property?  As explained in more detail in the next section, selling crypto for a gain or profit will result in a taxable event.  By obtaining a crypto-backed mortgage the crypto-borrower gets to: (1) Use OPP – Other People’s Money; (2) Not sell their crypto; (3) Retain ownership of their Crypto; (4) Avoid paying federal capital gains taxes, because they have not sold their crypto; and (5) Maintain their position and watch their crypto appreciate, if they believe it will increase in value.

Why not just transfer the Crypto Peer-to Peer (i.e. “P2P” meaning directly to the Seller in exchange for Seller’s Property)? If you are the buyer then the reasons are the same as those stated in the preceding paragraph, but there is an added disadvantage for the buyer. No title insurance company will insure the transaction unless the property is purchased with Fiat.  In cryptocurrency terms, “Real currency” is called “Fiat” which is coin and paper money of the United States (or other foreign country) issued by that government’s central bank.

How is Crypto treated for federal tax purposes by the IRS?  According to IRS Publication 544, virtual currency is treated the same as property for federal income tax purposes, so the same general tax principles that apply to property transactions apply to transactions using virtual currency.  Examples of transactions involving virtual currency include:

  1. Exchanging virtual currency for property, goods, or services;
  2. Receiving virtual currency as payment for goods or services;
  3. Receiving or transferring virtual currency for free (without providing any consideration) that does not qualify as a bona fide gift;
  4. Exchanging/trading of one virtual currency for a different virtual currency;
  5. Selling virtual currency; and
  6. Any other disposition of a financial interest in virtual currency.

What are the Tax consequences of obtaining a Crypto loan or Crypto-backed mortgage?  Unlike selling crypto to purchase property, pledging crypto to obtain a crypto-backed loan, only to have the crypto-borrower’s crypto returned later is not a taxable event.  It’s like the crypto buyer saying, “hold my crypto but give it back to me later, when I pay off your loan.” 

Contrarily, What are the Tax Consequences of Buying and Selling Real Estate with Crypto?  The IRS published its: Guidance [IRS Notice 2014-21], Publication 544 (Sales and other Disposition of Assets), and FAQs [fully answering 46 different questions] regarding the federal income tax treatment of cryptocurrency (which the IRS calls Virtual Currency) when buying, selling, and exchanging cryptocurrency for property, goods, or services.

IRS FAQ #Q4 is directly on point in asking and answering, “Will I recognize a gain or loss when I sell my virtual currency for real currency?   Yes.  When you sell virtual currency, you must recognize any capital gain or loss on the sale, subject to any limitations on the deductibility of capital losses.  For more information on capital assets, capital gains, and capital losses, see Publication 544, Sales and Other Dispositions of Assets.”

IRS FAQ #Q19.  “Will I recognize a gain or loss if I sell or exchange property (other than U.S. dollars) for virtual currency?  Yes.  If you transfer property held as a capital asset in exchange for virtual currency, you will recognize a capital gain or loss.  If you transfer property that is not a capital asset in exchange for virtual currency, you will recognize an ordinary gain or loss.  For more information on gains and losses, see Publication 544,, Sales and Other Dispositions of Assets.”

IRS FAQ #Q27. “I received cryptocurrency in a peer-to-peer transaction or some other type of transaction that did not involve a cryptocurrency exchange.  How do I determine the cryptocurrency’s fair market value at the time of receipt?  If you receive cryptocurrency in a peer-to-peer transaction or some other transaction not facilitated by a cryptocurrency exchange, the fair market value of the cryptocurrency is determined as of the date and time the transaction is recorded on the distributed ledger, or would have been recorded on the ledger if it had been an on-chain transaction.  The IRS will accept as evidence of fair market value the value as determined by a cryptocurrency or blockchain explorer that analyzes worldwide indices of a cryptocurrency and calculates the value of the cryptocurrency at an exact date and time.  If you do not use an explorer value, you must establish that the value you used is an accurate representation of the cryptocurrency’s fair market value.”

IRS FAQ #Q20.  “How do I calculate my gain or loss when I exchange property for virtual currency? Your gain or loss is the difference between the fair market value of the virtual currency when received (in general, when the transaction is recorded on the distributed ledger) and your adjusted basis in the property exchanged.  For more information on gain or loss from sales or exchanges, see Publication 544, Sales and Other Dispositions of Assets.”

IRS FAQ #Q21.  “How do I determine my basis in virtual currency that I have received in exchange for property?  If, as part of an arm’s length transaction, you transferred property to someone and received virtual currency in exchange, your basis in that virtual currency is the fair market value of the virtual currency, in U.S. dollars, when the virtual currency is received.  For more information on basis, see Publication 551, Basis of Assets.”

IRS FAQ #Q43.  “Where do I report my capital gain or loss from virtual currency?  You must report most sales and other capital transactions and calculate capital gain or loss in accordance with IRS forms and instructions, including on Form 8949, Sales and Other Dispositions of Capital Assets, and then summarize capital gains and deductible capital losses on Form 1040, Schedule D, Capital Gains and Losses.”

IRS FAQ #Q44.  “Where do I report my ordinary income from virtual currency? You must report ordinary income from virtual currency on Form 1040, U.S. Individual Tax Return, Form 1040, U.S. Individual Tax ReturnForm 1040-SSForm 1040-NR, or Form 1040, Schedule 1, Additional Income and Adjustments to Income, as applicable.”

Where else can I get a Crypto-Backed Mortgage?  Milo, Figure, Ledn, and USDC.homes.

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] The interview was conducted with the assistance of Josip Rupena, CEO and Colin McMahon, Team Lead for Milo and Loan Consultant.

[2] Milo’s programs are subject to change.


Watch What You Promise Buyers.   In October 2022, the U.S. Securities and Exchange Commission (“SEC”) filed a multi-count Federal lawsuit against a Florida real estate agent and his real estate companies. The SEC sought a permanent injunction against the Realtor from practicing real estate, disgorgement of all funds as ill-gotten gains, interest, and civil penalties, due to the real estate agent’s alleged violation of Sections §5(a) [Selling a Security without an approved prospectus], §5(c) [Selling unregistered securities], §17(a)(1) [Offering a security as an artifice/scheme to defraud], §17(a)(2) [Offering a security with untrue statements or omissions], §17(a)(3) [engage in fraud or deceit] of the Federal Securities Act, and §10(b) [use manipulative or deceptive devices], §10b-5(a) [employ device/scheme/defraud], §10b-5(c) [engage in fraud/deceit], §15(a)(1) [Failing to registered as a national securities broker] of the Federal Exchange Act.[1]

What did the Realtor do?  The SEC accused the realtor of giving investors: (1) Assurances their investments would be successful; (2) An “Attestation of Rent” guaranteeing investors a specified monthly rental income; (3) False promises how their funds would be used, to wit: to repair, renovate, and then lease properties, but the funds were not used for that purpose; (4) Marketing brochures with pictures, descriptions and addresses of the properties, amount of rent and taxes, the property management fee, and the amount of expected monthly profits; and(5)An opportunity to invest in an enterprise which would generate investment returns.

“Securities” include more than you think.  So what’s wrong with promising a buyer a return on their investment?  Well, you may be surprised to learn that although the term “Securities” is generally thought of as traditional investments like stocks and bonds; “securities” also includes the much broader and more encompassing term “Investment Contracts.”  Both the SEC and the federal courts frequently use the “investment contract” analysis to determine whether business offerings or arrangements qualify as a “security,” which therefore would be under their jurisdiction and subject to federal securities laws.  In fact, for well over half a century, “investment contracts” have been the critical vehicle used by the SEC to bring a host of investments into the traditional definition of a security.[2]

Howey analysis of “Investment Contracts.”  The U.S. Supreme Court’s Howey case and subsequent cases have found that an investment contract exists when: (1) a person invests money; (2) in a common enterprise; (3) with a reasonable expectation of profits; (4) to be derived from the efforts of others.[3]  The so-called “Howey test” applies to any contract, scheme, or transaction, regardless of whether it has any of the characteristics of typical securities.[4]  The focus of the Howey analysis is not only on the form and terms of the instrument itself but also on the circumstances surrounding the investment and the manner in which it is offered, sold, or resold.  Therefore, persons and entities engaged in the marketing, offering, selling, reselling, or distribution of any investment will need to analyze the offering to determine whether the federal securities laws apply.

So what if what I am offering is a security?  The SEC’s goal is to provide investors with enough information to allow investors to make informed investment decisions.  Therefore, the federal securities laws require all offers and sales of securities, to either be registered under the SEC’s provisions or to qualify for an exemption from registration.  The registration provisions are stringent, require persons to disclose certain information to investors, and which must be both complete and not materially misleading.[5]  Therefore, in hindsight, it probably would have been advisable for the Realtor to not have made such bold promises that the buyers/investors were guaranteed any type of investment return and should conduct their own due diligence. 

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]   Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §77q(a)];

    Section 10(b) and of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §78j(b)];

    Rule 10b-5 thereunder [17 C.F.R. §240.10b-5];

    Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§77e(a) and 77e(c)]; and

    Section 15(a)(1) of the Exchange Act [15 U.S.C. §78o(a)(1)].

[2] U.S. Securities and Exchange Commission, Framework for “Investment Contract” Analysis of Digital Assets.

[3] Id.; and Sec v. ETS Payphone, Petition for Rehearing (11th Cir. 2002). 

[4] Whether a contract, scheme, or transaction is an investment contract is a matter of federal, not state, law and does not turn on whether there is a formal contract between parties.  Rather, under the Howey test, “form [is] disregarded for substance and the emphasis [is] on economic reality.”  Howey, 328 U.S. at 298.  The Supreme Court has further explained that that the term security “embodies a flexible rather than a static principle” in order to meet the “variable schemes devised by those who seek the use of the money of others on the promise of profits.”  Id. at 299.

[5] U.S. Securities and Exchange Commission, Framework for “Investment Contract” Analysis of Digital Assets.

RESPA – The Good, The Bad, and The Ugly. Anti-Kickbacks in Real Estate.

Why RESPA was enacted.    In the 1970’s the title and mortgage industry asked Congress to step in to stop real estate agents from demanding that they be paid kickbacks in exchange for referring homebuyers.  Real estate agents reasoned that referral fees should be permissible because after-all, the customer was only procured through the real estate agent’s hard work and marketing efforts, and it is not generally forbidden in other industries.  However, title companies and mortgage companies made a more compelling argument, arguing kickbacks necessarily result in raising prices, which ultimately are passed on to the consumer.  So, in 1974, Congress passed RESPA (The Real Estate Settlement Procedures Act). [1]

Who Regulates RESPA.  The CFPB is the primary regulator with direct authority over RESPA.[2]

Who does RESPA apply to?  Generally it applies to prohibit conduct by Title Agents, Attorneys; Real Estate Agents, Mortgage Brokers; Banks, Developers, Builders, and Sellers of Real Estate when a Buyer is obtaining a Federally Related Mortgage.

What does RESPA Prohibit?  As it relates to title and mortgage services, RESPA generally prohibits kickbacks, referral fees, unearned fees, splitting fees, and sellers from requiring borrowers to purchase title insurance from companies chosen by sellers.  Of course for every rule however, there are numerous exceptions.[3] 

Why should I care (RESPA Penalties)?  (1) Joint and several liability; (2) Up to $10,000 fine; (2) Imprisonment up to 1 year; (3) Treble (3x) damages; (4) Subject to private causes of action; (5) Reasonable attorney fees awarded to the prevailing party; (6) Injunctions to enjoin violations; and (7) Good likelihood of leading to State investigation, loss of licensure and other penalties.[4] 

Statute of Limitations.  One (1) year from the date of occurrence of the violations, or three (3) years if the action is brought by the government.[5]   However, cases have extended the statute of limitations to file RESPA suits under principals of equitable tolling.[6] 

Sneaky devils.  But as the saying goes, “If you build a better mousetrap, nature will build a better mouse.”[7]  Accordingly, real estate brokers and title companies have tried to figure out ways to evade RESPA by entering into creative or sham arrangements in order to disguise kickbacks. This article explores RESPA and what payments or conduct may or may not be prohibited, and some of the more notable exceptions.



Section 8(a) of RESPA is written a bit more complicated, but to summarize, it generally prohibits a person from: (i) Giving or receiving any thing of value (ii) pursuant to an agreement or understanding to (iii) refer (iv) settlement services, in connection with (v) a federally related mortgage loan.[8]

All five (5) elements must be present; and if any one is missing then there is no RESPA anti-kickback violation.  Broken down the five (5) elements are as follows:

1. Thing of Value.[9]  Broadly defined to be virtually anything one receives in consideration for making a referral:

LoansServicesOther consideration
Duplicate payments of a chargeStocksDividends
Distribution of partnership profitsFranchise royaltiesCredits representing monies that may be paid in the future
Opportunities to participate in a money-making programRetained or increased earningsIncreased equity in entity
Special bank deposit or accountSpecial or unusual banking termsServices of all types at special or free rates
Sales or rentals at special prices or ratesLease or rental payments based in whole or in part on the amount of business referredTrips
Payments of another person’s expensesReduction of credit again an existing obligation 
  1. Agreement or Understanding.[10]  An agreement or understanding for the referral of business incident to or part of a settlement service can be “oral or otherwise”, need not be written or verbalized, but may be established by a practice, pattern or course of conduct. When a thing of value is received repeatedly and is connected in any way with the volume or value of the business referred, the receipt of the thing of value is evidence that it is made pursuant to an agreement or understanding for the referral of business. 
  2. Referral.[11]   Any conduct to influence the selection of a particular settlement service provider. 
  3. Settlement Services.[12]  Anything done by Title Agents, Attorneys; Real Estate Agents, Mortgage Brokers; Banks required to get a federally related mortgage to finance the purchase of 1-4 family residential property are settlement services. 

Settlement Services are very broad and include but are not limited to:

  • Title services, title searches, Title examination, Title Insurance,
  • Closings
  • Preparation of documents, including notarization, delivery, and recording.
  • Services rendered by an attorney
  • Preparation of documents,
  • Surveys,
  • Credit Reports
  • Appraisals
  • Rendering of inspections, including inspections required by law, the sales contract, or mortgage
  • Pest and fungus inspections,
  • Services involving mortgage insurance
  • Services involving hazard, flood, or other casualty insurance or homeowner’s warranties.
  • “Services rendered by a real estate agent or broker”
  • Origination of a federally related mortgage loan
  • Taking loan applications
  • Handling of the processing and closing or settlement.
  • Any other services for which a settlement service provider requires a borrower or seller to pay.

Not an Examples:

  • For every buyer you send me I will pay you $500.00 for (Moving expenses, Grass cutting, Pool services).  These activities are not a violation because they are generally not settlement services required to get a mortgage to finance the purchase of 1-4 family residential property.
  • 5. Federally Related Mortgage Loan.[13] A loan secured by a 1st or subordinate lien on a 1-4 family residential property.
RefinancesAll Cash
2nd Or 3rd MortgagesPurchase Money Mortgage (i.e. When buyer gives seller a mortgage on the property as part of deal to buy the property)
ARMsLoan primarily for Business, Commercial  or agricultural purposes.
Reverse MortgagesConstruction Loans[15]
Interest Only MortgagesTemporary Financing
HELOCsVacant land (unless being built in 2 years)



Section 8(b) of RESPA generally prohibits, giving or receiving a portion, split or percentage of a real estate settlement service (in connection with a federally related mortgage) other than for services actually performed.[16] 

In other words, the title company cannot charge for work and then split that fee with someone else like the real estate agent.  Big difference between 8(a) and 8(b) is that in 8(b), a referral to the title company is not required; so even if there is no referral to the title company, the mere splitting of the fees with the real estate agent is itself a violation.  That is unless the title company is paying the fees for “services rendered” by the real estate agent.  Stated another way, if the title company is going to pay the real estate agent money from the closing, then it better be for actual services rendered.  Moreover, “A charge by a person for which no or nominal services are performed or for which duplicative fees are charged is an unearned fee and violates this section.”[17]



RESPA Section 8(c) provides a list of payments (provided or received) and arrangements that are not prohibited under RESPA Section 8(a) or 8(b). The CFPB has issued a FAQ section summarizing the exceptions as:

  1. Fees paid to attorneys for services actually rendered (For example, for an attorney of the buyer or seller to receive compensation as a title agent, the attorney must perform core title agent services (for which liability arises) separate from attorney services, including the evaluation of the title search to determine the insurability of the title, the clearance of underwriting objections, the actual issuance of the policy or policies on behalf of the title insurance company, and, where customary, issuance of the title commitment, and the conducting of the title search and closing.). 12 USC § 2607(c)(1)(A), Regulation X, 12 CFR §§ 1024.14(g)(3)(v).
  1. Fees paid by a title company to its duly appointed agent for services actually performed in the issuance of a title insurance policy. 12 USC § 2607(c)(1)(B).
  1. Fees paid by a lender to its duly appointed agent for services actually performed in the making of the loan. 12 USC § 2607(c)(1)(C).
  1. Bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed. 12 USC § 2607(c)(2).
  1. Payments under “cooperative brokerage and referral arrangements or agreements between real estate agents and brokers.” The statutory exemption restated in this paragraph refers only to fee divisions within real estate brokerage arrangements when all parties are acting in a real estate brokerage capacity, and has no applicability to any fee arrangements between real estate brokers and mortgage brokers or between mortgage brokers.) 12 USC § 2607(c)(3), Regulation X, 12 CFR §§ 1024.14(g)(1)(v)..
  1. Affiliated business arrangements, subject to specified conditions. 12 USC § 2607(c)(4).
  1. Other payments and classes of payments adopted by regulation after consultation with other specified federal agencies and officials. 12 USC § 2607(c)(5).
  1. Normal promotional and educational activities, that are not conditioned on the referral of business and that do not involve the defraying of expenses that otherwise would be incurred by persons in a position to refer settlement services or business incident thereto. Regulation X, 12 CFR §§ 1024.14(g)(1)(vi).
  1. An employer’s payments to its own employees for any referral activities. Regulation X, 12 CFR §§ 1024.14(g)(1(vii) [18]


What is an Affiliated Business Arrangement (AfbA).  One popular exception under 8(c) that curries a lot of attention is the Affiliated Business Arrangement.  An Affiliated Business Arrangement is defined as:

(A) a person or their associate[20] who is in a position to refer business (incident to or a part of a real estate settlement service involving a federally related mortgage loan), has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1% in a provider of settlement services; and (B) either of such persons directly or indirectly refers such business to that provider or affirmatively influences the selection of that provider.[21]

An affiliated business arrangement is not a violation of section 8 of RESPA if certain conditions are complied with such as:

  • The person making the referral provides a written disclosure on a separate piece of paper.  (see format below which describes: (i) the nature of the relationship; (ii) explains the ownership and financial interests between the one referring and the one providing the service, and (iii) an estimated charge or range of charges made by the provider)[22]
  • The person making the referral does not require any person to use a particular settlement service provider. [23]
  • Dividends and capital or equity distributions related to ownership interests are permitted. [24]
  • Loans, advances, and capital contributions are permitted as long as they are for ordinary business purposes and are not for the referral or unearned fees. [25]
  • Payments based on the amount of actual, estimated, or anticipated referrals are prohibited. [26] and,
  • Whether the investor is actually giving a thing of value will not be based on how the thing of value is labeled, but rather each will be determined by analyzing facts and circumstances on a case-by-case basis. [27]

Affiliated Business Arrangement Disclosure Statement (FORM). The regulations actually provide a form (Found in Appendix D) to be used to disclose an affiliated Business Arrangement, which simply needs to be filled out.[28]

Affiliated Business Arrangement Disclosure Statement Format Notice

To:                   _____

From:             (Entity Making Statement)

Property         _____

Date                _____

This is to give you notice that [referring party] has a business relationship with [settlement services provider(s)]. [Describe the nature of the relationship between the referring party and the provider(s), including percentage of ownership interest, if applicable.] Because of this relationship, this referral may provide [referring party] a financial or other benefit.

Set forth below is the estimated charge or range of charges for the settlement services listed. You are NOT required to use the listed provider(s) as a condition for [settlement of your loan on] [or] [purchase, sale, or refinance of] the subject property. THERE ARE FREQUENTLY OTHER SETTLEMENT SERVICE PROVIDERS AVAILABLE WITH SIMILAR SERVICES. YOU ARE FREE TO SHOP AROUND TO DETERMINE THAT YOU ARE RECEIVING THE BEST SERVICES AND THE BEST RATE FOR THESE SERVICES.

[Provider and settlement service]        _____

[charge or range of charges]        _____


I/we have read this disclosure form, and understand that referring party is referring me/us to purchase the above-described settlement service(s) and may receive a financial or other benefit as the result of this referral.



What could happen if a Real Estate Company and Title Company violate Section 8 of RESPA and do not properly exempt themselves as an Affiliated Business Arrangement (AfbA)?

In In re JRHBW Realty, Inc., d/b/a RealtySouth and TitleSouth LLC a title company and real estate brokerage were owned by the same parent company and had some of the same officers.  The CFPB and entered into a consent order generally addressing the disclosure deficiencies by the Title company and Real estate company.  The CFPB noted that:

  • The Real estate company did not use the format of the Disclosure form found in Appendix D.
  • The form did not use capital letters
  • The form did not highlight the fact that consumers could obtain similar settlement services from other providers and that they were free to shop around for those services  
  • The form was not set apart, but incorporated into the end of a list of descriptions of seven affiliated businesses, and was hidden.
  • The form included marketing statements touting the benefit and value of the affiliated entities. It stated, for example, that “[w]e at RealtySouth believe our affiliates provide superior service, value, and convenience;” “we believe that our affiliates’ charges are reasonable and are competitive with the amounts charged by others for the same services;”
  • The form used by the real estate company did not satisfy the “safe harbor” for affiliated business arrangements.
  • The CFPB concluded that Respondents violated Section 8(a) of RESPA by giving and receiving a thing of value pursuant to an agreement or understanding that the Real Estate Company would refer settlement services to its Title Company.
  • The Title Company and Real Estate company were jointly and severally fined $500,000.00, and ordered to produce all the HUD-1s to ascertain the identities of all the consumers affected. 



Section 9 of RESPA says,

  • No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company.
  • (b)                Any seller who violates the provisions of subsection (a) shall be liable to the buyer in an amount equal to three times all charges made for such title insurance.[29] 

Sellers cannot require a buyer (who is getting a federally related mortgage) to purchase title insurance from a particular title company; unless, the seller pays for the title insurance policy.  Sellers can recommend a title company, sellers can suggest it, sellers can even give buyers an incentive to buy title insurance from a particular title company; but Sellers cannot require a particular title company.  An economic incentive does not amount to required use. 

Note that Section 9 only really deals with requiring buyers to pay for a “title insurance policy.”   But that is not the only charge a title insurance company charges in a title insurance transaction.  So, what about the closing service fee (i.e. settlement fee) that title companies charge?  A Settlement fee is the fee charged for actually doing the work (i.e. for doing the closing)?  Nothing in Section 9 mandates that a seller (who is insisting that the Buyer use a particular title company) pay for the buyer’s closing service fee (i.e. settlement fee).  In such instances, Section 9 just requires the seller pay for the buyer’s title insurance policy.  So if the seller required a buyer to use a particular title company, and then only paid for the buyer’s title insurance policy, but not the buyer’s settlement fee, it appears there would be no violation of Section 9. 

If a seller violates Section 9, it is liable to the buyer in an amount equal to 3 times all charges paid by the buyer for title insurance.

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.”

* Additional Resources:

·        CFPB’s Real Estate Settlement Procedures Act FAQs

·        Phillip Schulman, Esq., RESPA Compliance and Survival Guide, 2013

·        Francis Trip Riley, III, Esq. RESPA Compliance: Avoid Pesky Section 8 Violations, 2022

·        Jon P. Klerowski, Esq., Demonstrating Value: How to Avoid Running Afoul of RESPA’s Anti-Kickback Provisions, 2017.

 [1] 12 CFR Part 1024 – Real Estate Settlement Procedures Act (Regulation X)

[2] Prior to the CFPB, HUD used to be the primary regulator of RESPA.

[3] https://www.hud.gov/hudprograms/respa

[4] See, 12 USC §2607(d)

[5] See, 12 USC §2614

[6] “[E]quitable tolling permits a plaintiff to sue after the statutory time period for filing a complaint has expired under three circumstances, “(1) the defendant has actively misled the plaintiff respecting the plaintiff’s cause of action, (2) the plaintiff in some extraordinary way has been prevented from asserting his or her rights, or (3) the plaintiff has timely asserted his or her rights mistakenly in the wrong forum.” CONOVER et al v. PATRIOT LAND TRANSFER, LLC et al, No. 1:2017cv04625 – Document 57 (D.N.J. 2019)

[7] By, Lawrence Block

[8] The full text of 12 USC § 2607(a) says, “(a) Business referrals.  No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.”  12 CFR Part 1024.14(b) is identical but adds to the end, “Any referral of a settlement service is not a compensable service, except as set forth in § 1024.14(g)(1). A company may not pay any other company or the employees of any other company for the referral of settlement service business.  12 CFR Part 1024.14(b) – Real Estate Settlement Procedures Act (Regulation X)

[9] See generally, Definition of “Thing of Value” 12 CFR Part 1024.14(d) – Real Estate Settlement Procedures Act (Regulation X); See also, 12 USC § 2602(2).

[10] See, 12 USC § 2607(a) and 12 CFR Part 1024.14(e) – Real Estate Settlement Procedures Act (Regulation X)

[11] See generally, Definition of Referral  12 CFR Part 1024.14(e) – Real Estate Settlement Procedures Act (Regulation X)

[12] See generally, Definition of “Settlement” and “Settlement Service” 12 CFR Part 1024.2(b) – Real Estate Settlement Procedures Act (Regulation X); See also, 12 USC § 2602(3) definition of Settlement Services  

[13] See generally, Definitions of “Federally Related Mortgage Loan” 12 CFR Part 1024.2(b) – Real Estate Settlement Procedures Act (Regulation X)

[14] See, 12 CFR Part 1024.5 – Real Estate Settlement Procedures Act (Regulation X)

[15] FAQs About RESPA for Industry.  Construction loans are not covered by RESPA unless. “Unless: 1) the loan is used as, or may be converted to permanent financing by the same lender; or 2) the lender issues a commitment for permanent financing; or 3) the loan is used to finance a transfer of title to the first user; or 4) the loan is for a term of two years or more, unless it is to a bona fide builder.”  See also, Regulation X, 12 CFR §§ 1024.5(b)(3).

[16] The full text of 12 USC § 2607(b) says, (b)Splitting charges No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed.  12 CFR Part 1024.14(c) is identical but adds to the end, “A charge by a person for which no or nominal services are performed or for which duplicative fees are charged is an unearned fee and violates this section. The source of the payment does not determine whether or not a service is compensable. Nor may the prohibitions of this part be avoided by creating an arrangement wherein the purchaser of services splits the fee.”  12 CFR Part 1024.14(c) – Real Estate Settlement Procedures Act (Regulation X).

[17] See,12 CFR Part 1024.14(c) – Real Estate Settlement Procedures Act (Regulation X).

[18] See, Appendix B to Regulation X provides further guidance on these payments and activities.

[19] See,12 USC § 2607(c)(4), Regulation X, 12 CFR §§ 1024.15).

[20] 12 USC §2602(8) the term “associate” means one who has one or more of the following relationships with a person in a position to refer settlement business: (A) a spouse, parent, or child of such person; (B) a corporation or business entity that controls, is controlled by, or is under common control with such person; (C) an employer, officer, director, partner, franchisor, or franchisee of such person; or (D) anyone who has an agreement, arrangement, or understanding, with such person, the purpose or substantial effect of which is to enable the person in a position to refer settlement business to benefit financially from the referrals of such business.”

[21] See, 12 USC § 2602(7).

[22]  See, Regulation X, 12 CFR §§ 1024.15(b)(1).

[23] See, 12 USC § 2607(c)(4), Regulation X, 12 CFR §§ 1024.15(b)(2).  (an exception exists if for a lender, requiring a buyer, borrower or seller to pay for the services of an attorney, credit reporting agency, or real estate appraiser chosen by the lender to represent the lender’s interest in a real estate transaction, or except if such person is an attorney or law firm for arranging for issuance of a title insurance policy for a client, directly as agent or through a separate corporate title insurance agency that may be operated as an adjunct to the law practice of the attorney or law firm, as part of representation of that client in a real estate transaction.

[24]  See, Regulation X, 12 CFR §§ 1024.15(b)(3)(i)(A).

[25]  See, Regulation X, 12 CFR §§ 1024.15(b)(3)(i)(B).

[26]  See, Regulation X, 12 CFR §§ 1024.15(b)(3)(ii)(A).

[27]  See, Regulation X, 12 CFR §§ 1024.15(b)(3)(iii).

[28] If the disclosure involves a lender then the form requires a different clause to be substituted.

[29] 12 U.S. Code § 2608, See also, Regulation X, 12 CFR §§ 1024.16

Florida Gives $25,000 in Real Estate Assistance to “Hometown Heroes”

First let me point out, I said “Gives $25,000,” I did not say “Forgives $25,000.”  So here is how Florida’s newly funded, $100 Million Dollar Hometown Heroes program works; and if you qualify, then it is an amazing program!  If you don’t qualify then that’s okay.  Keep reading until the end, because there are three (3) additional programs that are just too good to be true. 

When did the Hometown Heroes program start, and why haven’t I heard about it?  June 1st, 2022.

Who is offering the Hometown Heroes program?  40 years ago, Florida’s legislature created the Florida Housing Finance Corporation (“Florida Housing”), as a quasi-government agency charged with assisting Florida residents in obtaining affordable housing through a variety of programs; this is their newest.   

How much can I get?  Up to 5.00% of your first mortgage loan amount (maxed at $25,000.00).

What can it be used for?  Both the down payment and closing costs.

What real estate is eligible?  Existing properties, new properties (but not if obtaining a construction-perm loan), detached single family homes, condos, Up to 4-unit properties if buyer occupies one unit, town homes, mobile homes with land, and modular homes with land.

Is this a Loan or a Gift?   It’s a 0% loan. It is not a grant, nor a gift, nor will it be forgiven. 

When, if ever, do I have to repay it?  The loan gets recorded as a 30-year deferred 2nd mortgage which must be repaid in full upon: (1) Sale, (2) Refinancing; (3) Deed transfer; or (4) Homeowner no longer occupying property as their primary residence.

Can I apply with any lender or mortgage broker I choose?  No.

Then where can I apply?  Florida Housing maintains an online list of approved loan officers.  Only lenders approved by Florida Housing can participate, and even then, only “approved” loan officers within those companies can offer the product.

What are the qualifications and eligibility requirements:  If you can answer Yes or True to the following questions, then you may be eligible for a Hometown Hero Loan:

  • YES?      I am able to permanently reside in the US.
  • YES?      Within the past 3 years, I have not owned and occupied a home as my primary residence.  (** Note there are exceptions to this requirement such as: (i) Retired Veterans, Active Military, and their spouses are exempt; and (ii) Mobile homeowners on rented land are exempt.   
  • YES?      I am: (i) Actively licensed/certified in a qualified occupation (click here or scroll down),  (ii) a Veteran, (iii) a deceased veteran’s surviving spouse seeking a VA loan; or (iv) on Active Duty in the military (i.e. Air Force, Army, Coast Guard, Marine Corps, Navy, National Guard, or the Reserves).   
  • YES?      I work FULL (not part) time in a qualified occupation (* Veterans are exempt from being full time); OR I work a bunch of part time jobs but the hours add up to at least 40).
  • YES?      I have a copy of my Federal, State, or Local License/Certification (or if a veteran a DD-214, COE, or Verification of Active Duty)?
  • YES?      My purchase price is at or below the limits for the County in which I am purchasing.
CountyFHA and USDA loan limitsConventional and VA loan limits
Broward $460,000$647,200
Palm Beach$460,000$647,200
Monroe $710,700$710,700
INCREASE THE LOAN LIMIT IF:Property in Federal Target AreaProperty in Federal Target Area
  • YES?      My income (or if my spouse is also applying then our combined income) is at or below the limits for the County in which I am purchasing.
CountyIncome Limit
Broward $136,050
Palm Beach$138,000
Monroe $153,750
INCREASE THE INCOME LIMIT IF:Property in Federal Target Area
  • YES?      I have a 640 or higher FICO credit score (* 680 FICO if my debt-to-income ratio exceeds 45%, or if I am buying either a double wide mobile home with land or a manufactured home and land).
  • YES?      I qualify for a mortgage Loan.
  • YES?      I will complete a Homebuyer Education Class or HUD approved Counseling Course.
  • YES?      I will occupy the home within 60 days of closing as my primary residence. 

I see you provided a link above for which occupations qualify but can you just list the 107 Eligible Occupations?   There are many so it’s worth reviewing to see if you (or if you have a co-borrower) has a job that qualifies for the Home Town Hero Loan.

  • 911 Public Safety Communicator
  • Active-Duty Military Personnel
  • Acupuncturist
  • Adult Protective Services’ Enforcement (DCF)
  • Advanced Practice Registered Nurse (APRN)
  • Anesthesiologist
  • Anesthesiologist Assistant
  • Assisted Living Facility (ALF) Administrator
  • Assistant Public Defender
  • Assistant State Attorney
  • Athletic Trainer
  • Basic X-Ray Machine Operator (Radiologic)
  • Blood Gas Analyst (Laboratory)
  • Career Specialist (Educator)
  • Child Protective Services’ Enforcement (DCF)
  • Childcare Instructor
  • Childcare Operator
  • Chiropractic Physician
  • Chiropractic Physician’s Assistant
  • Classroom Teacher
  • Clinical Nurse Specialist
  • Clinical Social Worker
  • Correction Officer
  • Correctional Probation Officer
  • Dental Assistant
  • Dental Hygienist
  • Dentist
  • Dietetic Technician
  • Dietician
  • Electrologist
  • Emergency Medical Technician (EMT)
  • Federal Sworn Law Enforcement
  • Firefighter
  • General Radiographer (Radiologic)
  • Genetic Counselor
  • Hearing Aid Specialist
  • Hearing Aid Specialist Trainee
  • Home Health Aide
  • Juvenile Detention Officer
  • Juvenile Probation Officer
  • Laboratory Director
  • Laboratory Supervisor
  • Laboratory Technologist
  • Laboratory Testing Technician
  • Librarian/Media Specialist (Educator)
  • Marriage & Family Therapist
  • Massage Therapist
  • Medical Assistant
  • Medical Physicist (Radiologic)
  • Mental Health Counselor
  • Naturopathic Physician
  • Nuclear Pharmacist
  • Nurse Anesthetist
  • Nurse Midwife
  • Nursing Assistant (CNA)
  • Nursing Home Administrator
  • Nutrition Counselor
  • Nutritionist
  • Occupational Therapist
  • Occupational Therapist Aide
  • Occupational Therapist Assistant
  • Optician
  • Optometrist
  • Orthotic Fitter
  • Orthotic Fitter Assistant
  • Orthotist
  • Osteopathic Physician
  • Paramedic
  • Pedorthist
  • Pharmacist
  • Pharmacy Technician
  • Phlebotomist
  • Psychiatrist
  • Physical Therapist
  • Physical Therapist Assistant
  • Physician
  • Physician Assistant
  • Podiatric Physician
  • Podiatric Xray Assistant
  • Practical Nurse (LPN)
  • Prosthetist
  • Prosthetist Orthotist
  • Psychiatrist
  • Psychologist
  • Radiologic Specialty Technologist
  • Radiologic Technologist
  • Radiology Assistant
  • Registered Dietician Or Nutritionist
  • Registered Nurse (RN)
  • Registered Nurse Anesthetist
  • Registered Respiratory Therapist
  • Respiratory Care Practitioner
  • Respiratory Therapist
  • School Counselor
  • School Psychologist
  • Social Worker
  • Specialty Technologist (Radiologic)
  • Speech Language Audiologist
  • Speech Language Audiologist Assistant
  • Speech Language Pathologist
  • Speech Language Pathology Assistant
  • Sworn Law Enforcement Officer
  • Veteran
  • Veteran-Surviving Spouse of Veteran
  • Veterinarian
  • Veterinarian Assistant
  • Veterinarian Technician Veteran

Are there other programs (or) What if I do not qualify for the Hometown Heroes Loan?  Florida has other programs like the ones below.  Just click the links, input the number of residents who will be residing in the home, and the County where the property is located:  

Florida Assist (Up to $10,000.00)Offers up to $10,000 on FHA, VA, USDA and Conventional Loans as a deferred 2nd mortgage; is not forgivable; repayment is deferred.  Repaid in full upon: (1) Sale, (2) Refinancing; (3) Deed transfer; (4) Homeowner no longer occupying property as their primary residence; or (5) Satisfaction of the 1st Mortgage.  To qualify, the buyer’s income and purchase price cannot exceed:

County# of People Living in the HouseIncome LimitIncome Limit  in Federal Target AreaPurchase price limit Purchase price limit in Federal Target Area
Broward 1$90,700$104,305$382,194.90$467,127.10
Palm Beach 1$92,000$105,800$382,194.90$467,127.10

Florida Homeownership Loan Program (Up to $10,000): Offers up to $10,000 as a fully-amortizing, 2nd mortgage over a 15-year term; must make monthly payments. Repaid in full upon: (1) Sale, (2) Refinancing; (3) Deed transfer; (4) Homeowner no longer occupying property as their primary residence; or (5) Satisfaction of the 1st Mortgage.  To qualify, the buyer’s income and purchase price cannot exceed:

County# of People Living in the HouseIncome LimitIncome Limit  in Federal Target AreaPurchase price limit Purchase price limit in Federal Target Area
Broward 1$104,305$126,980$491,261.10$491,261.00
Palm Beach 1$105,800$128,800$491,261.10$491,261.00

Florida PLUS (Up to 3%, 4% or 5% of the Loan): Offers 3%, 4% or 5% of the total loan amount for down payment assistance and/or closing cost assistance, second Mortgage funds provided at closing and FORGIVEN at the rate of 20% a year over a 5-year term.  To qualify, the buyer’s income and purchase price cannot exceed:

County# of People Living in the HouseIncome LimitIncome Limit  in Federal Target AreaPurchase price limit Purchase price limit in Federal Target Area
Broward 1$104,305$126,980$491,261.10$491,261.00
Palm Beach 1$105,800$128,800$491,261.10$491,261.00

What if I have more questions?  Call (850) 488-4197, email DPA@FloridaHousing.org, or visit the Hometown Heroes webpage at https://www.floridahousing.org/programs/homebuyer-overview-page/hometown-heroes.  Additionally, Florida Housing’s approved loan officers may also be of assistance.

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.”


S.B. 1006 (Fla. Stat. §15.0522)Official State Dessert is Strawberry Shortcake.  With more than 10,000 acres of strawberries planted annually. Don’t worry, Key Lime Pie is still the Official State Pie Fla. Stat. §15.052.

H.B. 1557 (Fla. Stat. §1001.42). Dubbed the Don’t Say Gay Bill.  “Classroom instruction by school personnel or third parties on sexual orientation or gender identity may not occur in kindergarten through grade 3 or in a manner that is not age-appropriate or developmentally appropriate for students in accordance with state standards.”

H.B. 375 (Fla. Stat.§471.055). Structural Engineering specialist designation.  Engineers satisfying rigorous requirements established by the Board of Engineering may market themselves as specialists in structural engineering.  Useful for condos looking for someone to render a report.

H.B. 1411. (Fla. Stat. §163.32051)Floating Solar Facilities (new land use).  Harnessing energy in bodies of water cool the solar panels, boost power production, and decrease evaporation and algal blooms, so a new land use category is created for counties to allow “Floating solar facilities” to be constructed in certain areas.

H.B. 7053 (Fla. Stat §14.203). Creation of Statewide Office of Resilience relating to flooding and vulnerabilities.  This new office will promote, coordinate, strategize and create action plans for Florida’s flood vulnerability, resilience, and mitigation.

S.B. No. 222 Fla. Stat. §489.117). Licensed Pool/Spa/Servicing Contractors. may hire unlicensed personnel to perform the contractor’s work without the need for: making that unlicensed personnel the contractor’s employee; and without the need for the two parties entering a contract; notwithstanding, the licensed contractor must supervise and be responsible for the work.

S.B.  634 (Fla. Stat. §90.2035). Judicial Notice internet/satellite mapping images.  Allows courts to take judicial notice (i.e. accept evidence) of image, map, location, distance, calculation, or other information taken from a widely accepted web mapping service, global satellite imaging site, or Internet mapping tool, they indicate the date on which the information was created.

S.B. 1062 (Florida Chapter 48, §48.102, 48.184)Substantial changes to laws on Serving Process; Adds statute authorizing service by Email upon court request; Adds statute on how to remove occupants of properties but whom are unknown (i.e. squatters).

H.B. 7027 (Fla. Stat. §§35.01, 35.044, 35.05, 35.06)  Creation of a 6th Appellate Court, which will hear appeals from the 9th (i.e. Orange and Osceola counties), 10th (i.e. Hardee, Highlands, and Polk counties), and 20th (i.e. Charlotte, Collier, Glades, Hendry, and Lee counties) Judicial Circuit Courts.  The court will be located in Lakeland in Polk County and have 9 judges.  Effective January 1, 2023.

H.B. 7049 (Fla. Stat. §§50.011, 50.0311). Publication of legal notices by website in lieu of service of process or constructive service.   May now be done on “publicly accessible websites” meaning the city’s, county’s or local government’s  official website (or other private website designated by them).  A link to the public notices must be conspicuously placed on their homepage.

H.B. 1571 (Fla. Stat §810.15). Residential Picketing.  Makes it “unlawful for a person to picket or protest before or about the dwelling of any person with the intent to harass or disturb that person in his or her dwelling.”  Arrestable as 2nd degree misdemeanor if picketer or protester refuses law enforcement’s request to disperse. Note: The U.S. Supreme Court upheld a challenged ordinance restricting residential picketing in Frisby v. Schultz, 487 U.S. 474 (1988).

S.B. 352 (Fla. Stat. §713.135)Notice of Commencement for A/C under $15,000.  Don’t need a Notice of Commencement if replacing an AC system and the contract is for less than $15,000.

S.B. 1186 (Fla. Stat. §570.85). Expanding Agricultural tax classification. Can’t deny or revoke property’s agricultural classification due to agritourism being conducted on a bona fide farm, or because a nonresidential farm building or structure is used for agritourism. 

S.B. 1432 (Fla. Stat. §253.0346).   Limits leasing boats being moored.  Anchoring or mooring refers to a boater’s practice of seeking and using a safe harbor on the public waterway system for an undefined duration. Anchoring is accomplished using an anchor carried on the vessel.  Mooring is accomplished through the use of moorings permanently affixed to the bottom of the water body.  In Monroe county, limits leases of “sovereign submerged land” (land owned by the state which includes tidal lands, islands, sandbars, shallow banks, etc… Under the Florida Constitution, the title to all sovereign submerged lands is held by the state in trust for the people) for moorings and mooring fields to 10 years, unless the individual has established it as his domicile in accordance with §222.17 or because the vessel is the individual’s primary residence. 

S.B. 1432 (Fla. Stat. §327.4108). Pull boat anchor and move every 90 days.  Limits boat anchoring in Monroe County to 90 days by requiring boat to move from their starting location: to either a different designated anchoring area, or more than ½ nautical mile away.

S.B. 518 (Fla. Stat. §163.045)Tree pruning, trimming, removal on residential land.  A local government may not require a notice, application, approval, permit, fee, mitigation or replanting for the pruning, trimming, or removal of a tree on a residential property if property owner has documentation from an arborist certified by the ISA (International Society of Arboriculture) or a Florida licensed landscape architect that the tree poses an “unacceptable risk” (As defined therein) to persons or property. 

S.B. 706 (Fla. Stat. §163.3180). Allowing land development despite lack of schools.  Local government may allow a landowner to proceed with development of a specific parcel of land notwithstanding a failure of the development to satisfy school concurrency if certain other conditions are met.  (“The premise of concurrency is that the public facilities will be provided in order to achieve and maintain the adopted level of service standard”)

S.B. 1140 (Fla. Stat. §553.93). Video cameras, permitting.  Hard wired video cameras and cctv are now included in definition of low-voltage alarm system projects.

S.B. 1140 (Fla. Stat. §553.7932). Fire alarms, permitting.  for the alteration of 20 or less fire alarms, building departments may require a permit and inspection, but may not require plans or specifications be submitted for the permit.  However, the plans and specs must be at the worksite.

S.B. 546 (Fla. Stat. §516.031) No prepayment penalty allowed for Consumer finance loans. Consumer Finance Loans are a loan of money, credit, goods, lines of credit of $25,000 or less which lenders may charge more than 18% interest per annum.  Such lenders must be licensed with Florida’s Office of Financial Regulation.

H.B. No 749 (Fla. Stat. §501.165) Prohibitions on Automatic renewal clauses.  Sales or leases of any service to a consumer pursuant to a service contract (“‘Service contract’ means a written contract for the performance of services over a fixed period of time or for a specified duration that has an automatic renewal provision”), unless the consumer cancels that contract, must disclose the automatic renewal provision clearly and conspicuously in the contract, and must notify consumer no less than 30 days and no more than 60 days before the cancellation deadline.  Must allow cancellation in the same manner and means as when the consumer accepted.  Exempts Health studios; certain insurances; and home, motor and service warranty associations.

H.B. No 749 (Fla. Stat. §626.854) Penalizing Public Adjuster kickbacks to homeowners. Public adjuster and their apprentice cannot offer residential property owner a rebate, gift, gift card, cash, coupon, waiver of any insurance deductible in exchange for: allowing a roof inspection, making a roof insurance claim, or giving referrals for roof repairs. Penalty increased from maximum of $10K to $20K if done during state of emergency.

S.B. 1380 (Fla. Stat. §715.075). Parking on private property.   Private property owners may allow motor vehicles to park on their property and establish rules, rates, and charges for violating rules so long as they are “posted and clearly visible to persons parking motor vehicles.”  Invoices for charges must include, “THIS INVOICE IS PRIVATELY ISSUED, IS NOT ISSUED BY A GOVERNMENTAL AUTHORITY, AND IS NOT SUBJECT TO CRIMINAL PENALTIES.”  Cities and counties cannot prohibit these rights.

H.B. 1421 (Fla. Stat. §943.082)  School Safety reporting activity using mobile devices.  Suspicious activity may be reported by students via Android and Apple devices anonymously concerning unsafe, potentially harmful, dangerous, violent, or criminal activities, or the threat of these activities, to appropriate public safety agencies and school officials via a program called “FortifyFL.” Changes to the law add that if person knowingly submits false tip, then the IP address of the mobile device will be submitted to law enforcement and subject to criminal penalties

S.B. 962 (Fla. Stat. §§125.01055, 166.04151). Affordable Housing permitted on commercial and industrial zoned property.  If a parcel is zoned for commercial or industrial use, an approval may include any residential development project, including mixed-use, so long as 10% or more of the units are for affordable housing and the developer agrees not to apply for or receive funding under s. §420.5087.

H.B. 105 (Fla. Stat. §§386.201, 386.209)Smoking and Vaping, name change, preemption and regulation by cities/counties, public beaches, parks, cigars excepted.  “Florida Clean Indoor Air Act” is changed to “Florida Clean Air Act.”  Smoking regulation is preempted to the State; but counties and cities may restrict smoking within public beaches and parks, but not unfiltered cigars. Notwithstanding, Counties and cities may impose more restrictive regulations on vaping.

S.B. 2-D  Fla. (Stat. §489.147). Mandatory Disclosure by Contractors relating to insurance claim for roof damage.— The statute is modified to add: (1) As used in this section, the term: (a) “Prohibited advertisement” means any written or electronic communication by a contractor which encourages, instructs, or induces a consumer to contact a contractor or public adjuster for the purpose of making an insurance claim for roof damage, if such communication does not state in a font size of at least 12 points and at least half as large as the largest font size used in the communication that: 1. The consumer is responsible for payment of any insurance deductible; 2. It is insurance fraud punishable as a felony of the third degree for a contractor to knowingly or willfully, and with intent to injure, defraud, or deceive, pay, waive, or rebate all or part of an insurance deductible applicable to payment to the contractor for repairs to a property covered by a property insurance policy; and 3. It is insurance fraud punishable as a felony of the third degree to intentionally file an insurance claim containing any false, incomplete, or misleading information. The term includes, but is not limited to, door hangers, business cards, magnets, flyers, pamphlets, and e-mails.

S.B. 2-D  Fla. (Stat. §627.701, 627.7011)  Allowing insurers to charge a separate deductible for residential roofs, and if so, the insurer can withhold payments until insured shows actual payment for repairs to the roof (in the amount of the deductible).

S.B. 2-D  Fla. (Stat. §627.70152)Attorney Fee multiplier awards in property insurance claims is essentially eliminated.  

S.B. 898 (Fla. Stat. §§83.515; 509.211). Apartment Landlords required to do employee screenings (Dubbed “Miya’s Law.”).  Landlords of Transient apartments (“building or complex of buildings in which more than 25 percent of the units are advertised or held out to the public as available for transient occupancy”) and Non-transient apartments (“building or complex of buildings in which 75 percent or more of the units are available for rent to nontransient tenants) must conduct background screening of criminal records, including as sexual predator and offender;  allows for landlord to refuse to hire employee convicted, pled guilty, or no contest  to criminal offense involving: a disregard for safety of others, violence, murder, sexual battery, robbery, carjacking, home-invasion robbery, and stalking.

S.B. 898 (Fla. Stat. §83.53).  Landlord access to dwelling for repairs. Reasonable notice to tenant to make repairs is changed from 12 hours to at least 24 hours.  Does not change exception in the event of emergencies, tenant consents, when tenant unreasonably withholds consent, or if tenant is absent from  premises for specified period. 

S.B. 898 (Fla. Stat. §509.098)Public lodging – Prohibition on hourly rates.  Public lodging establishment (i.e. a hotel, motel, nontransient apartment, transient apartment, bed and breakfast inn, timeshare project, or vacation rental see  definitions within Fla. Stat. §509.242) may not offer an hourly rate for an accommodation. 

S.B. 4-D (Fla. Stat. §553.844). Elimination of 25% Roof Replacement Rule.  Directs Florida Building Code to be modified to state that if “25% or more of such roofing system or roof section is being repaired, replaced, or recovered, only the repaired, replaced, or recovered portion is required to be constructed in accordance with the Florida Building Code in effect.”

S.B. 4-D (Fla. Stat. §§553.899, 718.103, 718.112, 719.103, 719.104, 719.106) Mandatory Condo and Co-op Structural Inspections.  Mandatory Milestone inspections must be performed for buildings 3 stories or higher by 12/31 for buildings 30 years old (measured by date building’s certificate of occupancy was issued).  For buildings within 3 miles of coastline inspection period is shortened to 25 years and then reinspection every 10 years thereafter.  However, for buildings with a C.O. issued on or before 07/01/92 the milestone inspection may occur by 12/31/24.  Requires the City to provide notice to the buildings by certified mail if a milestone inspection is required.   Inspections are broken down into phase I (a visual inspection for substantial structural deterioration, which must be done w/in 180 days) and if found then Phase II (destructive or nondestructive testing).  The engineer or architect’s report is sealed and submitted to the Association and the Building Dept.  Building Dept. can then prescribe timelines and penalties for compliance but no more than w/in 365 days from the report.  Upon failure to make repairs, the building department may review and determine if building is unsafe for human occupancy.  Unit owners and renters are entitled to inspect the report and it must be posted on the Association’s website.  Associations must conduct “structural reserve studies” relating to the building’s structural integrity and safety every 10 years after the association was created (associations existing before 07/01/22 must complete by 12/31/24).  Failure to complete a structural integrity reserve study or milestone inspection can be a breach of the Association Officer’s and Director’s fiduciary duty.  Bylaws are amended to add that in additional to annual operating expenses, the budget must include reserve accounts for: (1) capital expenditures and (2) differed maintenance which must include (but are not limited to: roof replacement, building painting, pavement resurfacing, and other items exceeding $10,000.  The amount of the reserve for an item is determined by the Association’s structural integrity reserve study (which must be completed by 12/31/24).  Effective 12/31/24 unit-owner controlled associations may not provide no reserves or less than the structural integrity reserve study.   Structural integrity reserve studies must be done every 10 years and must include: (1) Roof; (2) Load-bearing walls or other primary structural members; (3) Floor; (4) Foundation; (5) Fireproofing and fire protection systems; (6) Plumbing; (7) Electrical Systems; (8) Waterproofing and exterior painting; (9) Windows; any other item having a deferred maintenance expense or replacement cost exceeding $10,000.

H.B. 1563 (Fla. Stat. §196.077)Additional Homestead Exemption created for classroom teachers, law enforcement officers, firefighters, emergency medical technicians, paramedics, child welfare professionals, and servicemembers.  Entitled to an additional exemption of up to $50,000 on the assessed valuation greater than $100,000 and up to $150,000 for all levies other than school district levies.

H.B. 423 (Fla. Stat. §553.792) Building permits, timing for inspectors to approve and ask for additional information.  Provides timeline for permit applications to be reviewed by building department and how many times they can ask for additional information.

S.B. 1380 (Fla. Stat. §712.03, 712.04).  The Marketable Record Title Act (MRTA) was enacted in 1963 “to simplify conveyances of real property, stabilize titles, and give certainty to land ownership.” Generally, MRTA extinguishes most rights/claims in real property that are more than 30 years old, but there are numerous exceptions.  Property owners, particularly those with recorded covenants and restrictions designed to preserve the character of the neighborhood, were often dismayed in the past when they discovered that their neighborhood covenants and restrictions had been invalidated by the operation of MRTA. Changes have been made relating thereto.

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 – How Should I Take Title / Ownership?

Why is it called Real Estate?    Florida has a limited number of estates in land. The term ”estates” refers to interests in land.  The interests are either possessory, or may become possessory in the future. Estates that have no present right to possession but which will or may become possessory in the future are called future interests.  This article discusses types of estates recognized in Florida. 

I.             Fee Simple Absolute a/k/a Fee Simple.  “A title in fee simple is the highest [100%] quality of estate in land known to law.”[1]   It represents the most comprehensive group of rights a person may have in land, including exclusive: possession, use, and enjoyment.  The holder is free to assign, convey, or devise (i.e. will) the whole or part of their fee simple estate.  Unless a contrary intention appears in the deed, it is generally presumed that the recipient (called a grantee) is getting fee simple title.[2]

II.           Fee Simple Determinable.   In laymen’s terms, You can have the property but I get it back if….  A fee simple determinable typically uses words like “so long as,” “until” or “during that time.”  The estate will automatically terminate upon the occurrence or nonoccurrence of some contingency or event.  For example, A conveys to B so long as the land is used for residential purposes, and when the land is no longer used for residential purposes, will revert to A.  In the hypothetical B gets a Fee Simple Determinable because B’s ownership will end if the contingency happens.  Prior to the occurrence of the terminating event, B has all the rights and liabilities of a fee simple absolute owner i.e. absolute right to exclusive possession, use, and enjoyment.  If however, B wants to assign, convey, or devise B’s interest B would need to either have A sign off or transfer the property subject to the contingency.  If the stated event occurs (i.e. the property stops being used for residential purposes in the example above), B’s fee simple determinable will terminate and the estate revert back to A – the grantor. Other examples are:

  • “This conveyance is made subject to and upon the express condition that should the party of the second part cease to use the foregoing land for railroad purposes, then and in that event the title to said property shall revert to and vest in the said [Grantor] and his heirs and assigns.”[3]
  • “To the Town of Miami Beach is conveyed exclusively for park purposes and shall never be used for commercial or residential purposes, and should the Town of Miami Beach at any time abandon said property as park property, or use the same for commercial or residential purposes, then in such event, all right, title and interest vested in the Town of Miami Beach shall immediately terminate and the legal title thereto, shall immediately be revested in the Southern Bank Trust Company as Trustee for the Ocean Beach Realty Company.” [4] 
  • “to be held, controlled, used, pledged, mortgaged or sold by my executors hereinafter named, in any manner that in her careful judgment may seem to be to the best interest of herself and to the estate so long as she remains single.”[5]
  • to B so long as B runs the family business, and when B ceases to run the family business the estate automatically terminates and reverts to the grantor.

III.          Fee Simple Subject to Condition Subsequent.  The distinction between a “fee simple determinable” and a “fee simple subject to condition subsequent” is subtle. Remember, a fee simple determinable automatically terminates upon the occurrence or nonoccurrence of some contingency or event.  But, a fee simple subject to condition subsequent permits the grantor to terminate the estate as soon as the contingency occurs.  The test is whether the estate automatically expires upon the happening of the stated event (i.e. a fee simple determinable), or whether the grantor has the power to elect to terminate the estate by some affirmative action (i.e. a fee simple subject to condition subsequent).

  • To B, upon condition that B never sells beer on the premises, and if B sells beer on the premises, then A, the grantor, has a right to reenter the land and terminate B’s estate.
  • to B provided that B runs the family business, and if B ceases to run the family business, then the grantor has the right to terminate the estate

IV.          21 year limitation on Reverters.  “Fee simple determinable” and “Fee simple subject to condition subsequent” are no longer customarily used and Florida disfavors alienating property (stopping property from being sold).  That is why reverter clauses like those found within “fee simple determinable” and “fee simple subject to condition subsequent” may be declared null-and-void after 21 years.[6]  There are exceptions if the property is granted for governmental, educational, literary, scientific, religious, public utility, public transportation, charitable or nonprofit corporation or association.

V.           Regular Life Estates.  A life estate is an interest given in property which only lasts as long as a particular human being’s life. For example, a sole surviving Mom may wish to leave her property to certain beneficiaries like her children.  Therefore, Mom (acting in the capacity as Grantor) may deed her property from herself (as Grantor), right back to herself (i.e. naming herself as the Grantee) but this time specifying that she is only reserving a life estate (L.E.) for herself, while also conveying the remainder in fee simple to her Son (i.e. Son is called the Remainderman).  For instance, if a grantor, conveys ”to Son and his heirs, subject however to a life estate in Parent,” then Parent has successfully reserved a valid life estate for Parent.  

  • The conveyance from Grantor “to B for life” or “to B until her death” creates a life estate in B, measured by the length of B’s life. 

Problems with Life Estates.  While life estates can be helpful in some situations, they can also be problematic because in a regular (not a lady bird deed as discussed below) the Life Tenant loses some control to make major decisions.  For certain decisions, the Life Tenant may need the Remaindermen’s consent.  Here are some examples of a Life Tenant’s rights and responsibilities:

  • RIGHTS:               Life Tenants are entitled to use, possession, and enjoyment.[7]
  • RIGHTS:               Life Tenants are entitled to rents and profits.
  • RIGHTS:               Life Estates terminate on the Life Tenant’s death (meaning it cannot be inherited).  While alive, a Life Tenant can only transfer their own interest (not the remaindermen’s interest) in the real property.  So if a Life Tenant transfers their interest to a third party, the Remaindermen will still have 100% of the Remainderman’s interest.  The Life Tenant cannot destroy the Remaindermen’s interest because it does not belong to the Life Tenant.  The grantee of a Life Tenant’s interest would have an estate which will end upon the death of that Life Tenant (i.e. the grantee would receive what is called a “life estate per autre vie” which is a life estate measured by the life of the Life Tenant discussed in more detail below).   

  • RESPONSIBILITIES:          “The duty owed by life tenants to remaindermen is comparable to that of a trustee or quasi-trustee, because the life tenant cannot injure the property to the detriment of the rights of the remaindermen.” [8]  Therefore, Life Tenants are liable to the Remainderman for waste (i.e. any act permanently diminishing the value of the Remaindermen’s future interest).[9]  
  • RESPONSIBILITIES:          Example of waste include: removing or destroying buildings[10], paying 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. [11]  However, the deed creating a life estate can absolve the life tenant for waste.[12]
  • RESPONSIBILITIES:          Florida Statute §713.801 deals with expenses for Life Tenants and Remaindermen.

A. Life Tenant expenses include:

(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) Environmental – if attributable to the use by the Life Tenant.

(4) Extraordinary repairs – if the Life Tenant incurred an expense for the benefit of his or her own estate without consent or agreement of the Remainderman, he or she must pay such expense in full.[13] 

(5) The Life Tenant must pay for special taxes or assessments for improvements to the property that add value to the property; however, if the special taxes or assessments for improvements are reasonably expected to outlast the Life Tenant’s estate, then the cost may be divided with the Remaindermen.

B. Remaindermen expenses include:

(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) Environmental matters attributable not attributable to the use by the Life Tenant.

(4) Extraordinary repairs – if the Remainderman incurred an expense for the benefit of his or her own estate without consent or agreement of the Life Tenant, he or she must pay such expense in full.[13] 

(5) The Life Tenant must pay for special taxes or assessments for improvements to the property that add value to the property; however, if the special taxes or assessments for improvements are reasonably expected to outlast the Life Tenant’s estate, then the cost may be divided with the Remaindermen.

VI.          Life Estate per autre vie.   Life estates may also be per autre vie, that is, for the life of a person other than the holder of the estate. The conveyance ”to A, for the life of B,” creates a life estate per autre vie.  More commonly, however, a life estate per autre vie, will come into existence if a life tenant conveys his interest. So if Mary, who has a life estate, conveys her life estate interest to Buyer, then all Buyer will have is an estate for the life of Mary.  

Even if a life tenant attempts to convey a fee simple to a purchaser, only a life estate per autre vie would be created.   In other words, a life estate holder can only convey their own life estate interest.  Moreover, even if they do convey their own life estate, they cannot destroy contingent or vested remaindermen rights.[14]

VII.         Enhanced Life Estates a/k/a Lady Bird Deeds.  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.  

We felt that an enhanced life estate is so unique that it deserved its own dedicated article.  So to learn about the: (1) History behind the Lady Bird Deed – Myth Busted; (2)  Comparative Chart; (3) What is a Lady Bird Deed (a/k/a Enhanced Life Estate); (4) Advantages of Enhanced Life Estates; (5) Example of an Enhanced Life Estate; (6) Regular Life Estate Distinguished; (7) How long does a life estate last (sounds silly); and (8) Uses for Medicaid Planning; please read our article – Giving the Bird. Lady-Bird Deeds.

VIII.       Tenants in Common (TIC).               When two or more people own property as tenants in common, the entire property is owned by the group of cotenants. Those cotenants may have equal ownership interests (i.e. A owns (50%) and B owns (50%) as Tenants In Common); or the cotenants may have unequal ownership interests (i.e. A owns (70%), B owns (20%) and C owns (10%) as tenants in common).  In other words, several parties can own the property in whatever different percentages they want.  Unless otherwise stated, the presumption is that the cotenants will all have equal interests;[15] but absent a family relationship between the cotenants or other evidence of donative intent, evidence that one cotenant contributed more than the other could overcome the presumption that the interests are equal.   That is why it is better practice to state the percentage of ownership right on the deed.

Each cotenant is entitled to possession, joint ownership, and control of the entire property (called Unity of Possession).[16] In other words the property itself is not physically partitioned, instead each tenant is said to own an undivided interest, and is entitled to possess the whole property.[17]

Tenants in common each have the unilateral power to use the property, exclude third parties from the property, receive their pro-rata portion of the income from the property, obtain partition of the property, alienate their share through sale or gift, place encumbrances on their share, and, on their death, pass their share to their beneficiaries or heirs by will or intestate succession.[18] “[U]pon the death of a cotenant, the deceased cotenant’s interest in the property subject to the tenancy in common passes to his or her heirs, and not to the surviving cotenant.”[19]

The share or interest of a tenant in common is fully subject to the claims of his or her creditors.[20]

Any party can sell their interest to anyone without notice to the other.  One of the key attributes that distinguishes a Tenant in Common from that of a Joint Tenant with Right of Survivorship is that upon the death of one of the Tenants in Common on the title, their interest does not automatically go to the other surviving co-tenants.  Instead upon the death of a co-tenant owning property as Tenant in Common, their interest goes to their heirs or as directed in their will.  To visualize it, upon the death of a cotenant owning a tenant in common, the transfer of interest is more vertical, going to the cotenant’s beneficiaries, but with a joint tenant with right of survivorship, the transfer is more horizontal going to the surviving joint tenants. 

IX.          Joint Tenants With Rights of Survivorship (JTWROS).  The principle feature of a joint tenancy is the right of survivorship. As a result of the survivorship feature, the property passes without the trouble and expense of probate. 

Owning a property as JTWROS means you hold title with someone else equally (i.e. 50%/50%  for two people, 1/3, 1/3, 1/3 for three people etc…) and when one of you dies the entire interest automatically passes to the remaining surviving joint tenant(s) rather than to the heirs of the one who died.  Note however, that if a co-owner conveys their interest to a 3rd party, the property loses its survivorship status as to that portion and defaults to being held as tenancy in common.

The creation of a JTWROS in real property must be clear.  The magic language “as joint tenants with right of survivorship” should be used.[21] Just using terms like “joint,” “jointly,” “joint tenants,” or “joint tenancy” are insufficient, and will result in a tenancy in common.[22]  In order to create a JTWROS, four (4) “unities” are necessary: (1) Possession; (2) Interest; (3) Title; and (4) Time. 

  • As to the unity of Possession, each joint tenant must be entitled to possession, joint ownership, and control of the property.[23] For example the unity of possession did not exist to create JTWROS between a husband and wife in jewelry designed for a man when the items were purchased by the husband for his personal and exclusive use.[24]
  • As to the unity of Interest, the interests of each joint tenant must be identical; the share or interest of each joint tenant must be the same as that of the other joint tenant or tenants.[25] If the shares of the cotenants were not equal, the unity of interest would be lacking and the estate could not be a joint tenancy.
  • As to the unity of Title, the interest of each joint tenant must have originated from the same conveyance or instrument. The required unities of title and time have given rise to the use of a straw man in cases where the grantor or transferor already owns the property and subsequently attempts to create a joint tenancy with another person through an indirect transfer through a straw man.
  • As to the unity of Time, the interest of each joint tenant must have commenced simultaneously).[26]

As in the case of a tenancy in common, a joint tenant’s interest is freely alienable; may be mortgaged or encumbered; and is subject to creditor claims.  Because each joint tenant owns an equal share rather than the whole, a creditor of one of the joint tenants may attach that tenant’s portion of the property.[27]  

Transferring a joint tenant’s interest could servers the joint tenants thus converting a JTWROS into a TIC. 


A (50%) and B  (50%) own as JTWROS. 

A conveys his interest to C. 

C and B just became TIC.  

The unities of time and title are thus destroyed.


A (33.3%), B (33.3%) and C (33.3%) own as JTWROS

A conveys his interest to D

D (33.3%) became a TIC with B and C.

But B (33.3%) and C (33.3%) remain JTWROS as to their two-thirds.

As a result, D’s (33.3%) interest will pass through to his heirs,

But B and C will have a right to survivorship in each other’s one-third interest.


A (50%) and B (50%) own as JTWROS. 

A conveys his interest to C, but reserves a life estate.

B and C just became TIC.[28] 

If a contract is signed by all of the joint tenants to sell property, the death of one of the cotenants before the deed is executed entitles the surviving cotenant or cotenants to all of the sales proceeds.[29]

X.           Tenants by the Entireties (TBE). Only spouses may own property as tenants by the entireties (TBE).[30]   For spouses who are currently married, the property can be titled in both of their names and held as TBE.  This is one of Florida’s best forms of asset protection from creditors, because the property may not be forcefully divided by creditors to satisfy the obligation of just one debtor spouse.  Additionally, when one spouse dies, property held as TBE automatically passes to the surviving spouse.[31] 

When creating a TBE, grantees are typically identified as husband and wife. For example, property may be conveyed “To John A. Doe and Jane B. Doe, husband and wife” or “To John A. Doe and Jane B. Doe, his wife.” Notwithstanding, unless a contrary intention appears, a transfer of real property to spouses is presumed to have intended to create a TBE.[32] 

In order to create a TBE, five (5) “unities” are necessary: (1) Possession; (2) Interest; (3) Title; (4) Time; and (5) Marriage.  Designation of the grantees as husband and wife will not create a TBE if in fact the grantees are not married.  If the grantees are not married, a tenancy in common will result instead. 

Neither spouse can sell, mortgage, or otherwise encumber TBE property without the other spouse’s consent, or the right to act as the other spouse’s agent.[33] Moreover, one spouse cannot: forfeit property held as TBE;[34]  lease property held as TBE;[35] contract to sell property held as TBE;[36] or mortgage property held as TBE.[37]  So a property held as TBE may not be terminated by one spouse, rather both must sign.[38]

If one spouse previously owned property wanted to transfer it to their spouse as TBE it can be done.  Direct conveyances between husband and wife are authorized by statute.[39] The statute provides that the spouse holding title to real property can create a tenancy by the entireties by either conveying the property to the other spouse by a deed that declares that its purpose is to create a tenancy by the entireties or as more typically seen, by conveying the property to both spouses. The grantee-spouse need not join in the execution of the deed.  For example: For example, if H owns land in fee simple and wants to create TBE, he may convey to “H and W, his wife, for the purpose of creating an estate by the entireties” or “to W for the purpose of making the H and W tenants by the entireties.”

As far as creditors are concerned, if both spouses have a joint debt owing to a creditor, then their mutual creditor can collect against property held by both spouses as TBE to satisfy the joint debt of the spouses.[40]  However, unlike property held as TIC or JTWROS, property held as TBE is not available to answer for the individual debts of a singular spouse.[41]  Therefore, creditors of one debtor spouse cannot attach to property mutually held as TBE.[42]

As to powers of attorney (POA) for spouses, the requirement that both spouses sign to transfer or mortgage homesteaded realty may be accomplished through a POA.   One spouse may sign a power of attorney for the other spouse, or both spouses may sign a power of attorney to a third party to act as the POA.  But to be effective, the POA must be executed in the same manner as a deed.[43]

Spouses TBE will be considered terminated upon: (1) Dissolution of marriage, in which case, their TBE ownership interests convert to tenants in common [TIC]; (2) Both spouses conveying the property to 3rd parties; (3) Both spouses conveying the property to themselves expressly as TIC or JTWROS.[44]

[1] State ex rel. Ervin v. Jacksonville Expressway Authority, 139 So. 2d 135, 138 (Fla. 1962)

[2] Fla. Stat §689.10 Words of limitation and the words “fee simple” dispensed with.—Where any real estate has heretofore been conveyed or granted or shall hereafter be conveyed or granted without there being used in the said deed or conveyance or grant any words of limitation, such as heirs or successors, or similar words, such conveyance or grant, whether heretofore made or hereafter made, shall be construed to vest the fee simple title or other whole estate or interest which the grantor had power to dispose of at that time in the real estate conveyed or granted, unless a contrary intention shall appear in the deed, conveyance or grant.

[3] Richardson v. Holman, 160 Fla. 65, 33 So. 2d 641 (1948)

[4] Ocean Beach Realty Co. v. City of Miami Beach, 106 Fla. 392, 143 So. 301 (1932)

[5] Raulerson v. Saffold, 61 So. 2d 926 (Fla. 1952)

[6] 689.18 Reverter or forfeiture provisions, limitations; exceptions.

(1) It is hereby declared by the Legislature of the state that reverter or forfeiture provisions of unlimited duration in the conveyance of real estate or any interest therein in the state constitute an unreasonable restraint on alienation and are contrary to the public policy of the state.

(2) All reverter or forfeiture provisions of unlimited duration embodied in any plat or deed executed more than 21 years prior to the passage of this law conveying real estate or any interest therein in the state, be and the same are hereby canceled and annulled and declared to be of no further force and effect.

(3) All reverter provisions in any conveyance of real estate or any interest therein in the state, now in force, shall cease and terminate and become null, void, and unenforceable 21 years from the date of the conveyance embodying such reverter or forfeiture provision.

(4) No reverter or forfeiture provision contained in any deed conveying real estate or any interest therein in the state, executed on and after July 1, 1951, shall be valid and binding more than 21 years from the date of such deed, and upon the expiration of such period of 21 years, the reverter or forfeiture provision shall become null, void, and unenforceable.

(5) Any and all conveyances of real property in this state heretofore or hereafter made to any governmental, educational, literary, scientific, religious, public utility, public transportation, charitable or nonprofit corporation or association are hereby excepted from the provisions of this section.

(6) Any holder of a possibility of reverter who claims title to any real property in the state, or any interest therein by reason of a reversion or forfeiture under the terms or provisions of any deed heretofore executed and delivered containing such reverter or forfeiture provision shall have 1 year from July 1, 1951, to institute suit in a court of competent jurisdiction in this state to establish or enforce such right, and failure to institute such action within said time shall be conclusive evidence of the abandonment of any such right, title, or interest, and all right of forfeiture or reversion shall thereupon cease and determine, and become null, void, and unenforceable.

(7) This section shall not vary, alter, or terminate the restrictions placed upon said real estate, contained either in restrictive covenants or reverter or forfeiture clauses, and all said restrictions may be enforced and violations thereof restrained by a court of competent jurisdiction whenever any one of said restrictions or conditions shall be violated, or threat to violate the same be made by owners or parties in possession or control of said real estate, by an injunction which may be issued upon petition of any person adversely affected, mandatorily requiring the abatement of such violations or threatened violation and restraining any future violation of said restrictions and conditions.

[7] Schneberger v. Schneberger, 979 So.2d 981 (Fla. 4th DCA 2008)

[8] Schneberger v. Schneberger, 979 So.2d 981 (Fla. 4th DCA 2008)

[9] Sauls v. Crosby, 258 So. 2d 326 (Fla. 1st DCA 1962);.

[10] Stephenson v. National Bank of Winter Haven, 92 Fla. 347, 109 So. 424 (1926)

[11] Schneberger v. Schneberger, 979 So.2d 981 (Fla. 4th DCA 2008)

[12] Fla. Stat. §713.801(3). Knabb v. Hill, 111 Fla. 272, 149 So. 335 (1933).

[13] “Mere knowledge on the part of a remainderman that improvements are being made by the holder of a life estate, and passive acquiescence therein, are not sufficient to charge him with the cost thereof.”  Under such circumstances, the Life Tenant cannot compel contribution from the remainderman. Williams v. Williams, 120 So. 2d 202 (Fla. 3rd DCA 1960)

[14] Scott v. Fairlie, 81 Fla. 438, 89 So. 128 (1921).

[15] Martinez v. Ward, 19 Fla. 175 (1882).

[16] Beal Bank, SSB v. Almand & Associates, 780 So.2d 45 (Fla. 2001) 

[17] Andrews v. Andrews, 155 Fla. 654, 21 So.2d 205 (1945)

[18] United States v. Craft, 535 U.S. 274, 279-280, 122 S.Ct. 1414, 152 L.Ed.2d 437 (2002)

[19] Julia v. Russo, 984 So.2d 1283 (Fla. 4th DCA 2008)

[20] Pegram v. Pegram, 821 So.2d 1264 (Fla. 2d DCA 2002).

[21] Fla. Stat. §689.15 Estates by survivorship —The doctrine of the right of survivorship in cases of real estate and personal property held by joint tenants shall not prevail in this state; that is to say, except in cases of estates by entirety, a devise, transfer or conveyance heretofore or hereafter made to two or more shall create a tenancy in common, unless the instrument creating the estate shall expressly provide for the right of survivorship; and in cases of estates by entirety, the tenants, upon dissolution of marriage, shall become tenants in common.

[22] Florida Uniform Title Standard 6.8

[23] Christensen v. Bowen, 140 So.3d 498 (Fla. 2014)

[24] Connell v. Connell, 93 So.3d 1140 (Fla. 2d DCA 2012)

[25] Beal Bank, SSB v. Almand & Associates, 780 So.2d 45 (Fla. 2001); Johnson v. Landefeld, 138 Fla. 511, 189 So. 666 (1939)

[26] Beal Bank, SSB v. Almand & Associates, 780 So.2d 45 (Fla. 2001)

[27] Hurlbert v. Shackleton, 560 So.2d 1276 (Fla. 1st DCA 1990); McDowell v. Trailer Ranch, Inc., 421 So.2d 751 (Fla. 4th DCA 1982) AmSouth Bank of Florida v. Hepner, 647 So.2d 907 (Fla. 1st DCA 1994). Beal Bank;

[28] Harelik v. Teshoney, 337 So. 2d 828, 828-829 (Fla. 1st DCA 1976)

[29] Weise v. Kizer, 435 So. 2d 381, 383 (Fla. 5th DCA 1983) ; rev. denied, 444 So. 2d 417 (1984).

[30] Maliska v. Dion, 62 So. 2d 4, 5 (Fla. 1952)

[31] Bendl v. Bendl, 246 So. 2d 574, 576-577 (Fla. 3d DCA 1971)

[32] Losey v. Losey, 221 So. 2d 417, 418 (Fla. 1969)

[33] Richart v. Roper, 156 Fla. 822, 25 So. 2d 80, 81 (1946)

[34] Smith v. Hindery, 454 So. 2d 663, 664 (Fla. 1st DCA 1984)

[35] Douglass v. Jones, 422 So. 2d 352, 354-355 (Fla. 5th DCA 1982)

[36] Parrish v. Swearington, 379 So. 2d 185, 186 (Fla. 1st DCA 1980)

[37] Leitner v. Willaford, 306 So. 2d 555, 557 (Fla. 3d DCA 1975)

[38] Douglass v. Jones, 422 So. 2d 352, 355 (Fla. 5th DCA 1982)

[39] Fla. Stat. §689.11

[40] Stanley v. Powers, 123 Fla. 359, 166 So. 843, 845-846 (1936)

[41] Sharp v. Hamilton, 520 So. 2d 9, 10 (Fla. 1988); Teardo v. Teardo, 461 So. 2d 276, 276 (Fla. 5th DCA 1985) ; Liberman v. Kelso, 354 So. 2d 137, 139 (Fla. 2d DCA 1978)

[42] Richardson v. Grill, 138 Fla. 787, 190 So. 255, 257 (1939) ; Kornberg v. Krupka, 118 So. 2d 790, 791 (Fla. 3d DCA 1960)

[43]Fla. Stat. §689.111 Conveyances of homestead; power of attorney.—

(1) A deed or mortgage of homestead realty owned by an unmarried person may be executed by virtue of a power of attorney executed in the same manner as a deed.

(2) A deed or mortgage of homestead realty owned by a married person, or owned as an estate by the entirety, may be executed by virtue of a power of attorney executed solely by one spouse to the other, or solely by one spouse or both spouses to a third party, provided the power of attorney is executed in the same manner as a deed. Nothing in this section shall be construed as dispensing with the requirement that husband and wife join in the conveyance or mortgage of homestead realty, but the joinder may be accomplished through the exercise of a power of attorney.

[44] Pace v. Woods, 177 So. 2d 779, 780 (Fla. 3d DCA 1965)


The Issue Presented To The Court.   On March 23, 2022, a case of first impression was decided in Florida, answering whether texts and emails between real estate agents sufficiently complied with the Statute of Frauds so as to create a binding and enforceable real estate contract by and between their clients.  See, Walsh v. The 3388 Barrow Island Trust, No. 4D21-1463 Fla. 4th DCA 03/23/22) (*note this case is specifically limited to real estate contracts).

Statement of Facts. Using a standard FAR/BAR As-Is Real Estate Purchase and Sales Agreement, Buyer’s real estate agent emailed a $3.1 million offer to close on 01/19/21 which Buyer signed.  Line 48-49 of Buyer’s written offer (within the FAR/BAR) defined, “[t]he effective date of this Contract shall be the date when the last one of the Buyer and Seller has signed or initialed and delivered this offer or final counter-offer.”  From here on out, neither the buyer nor the seller signed anything; rather the realtors themselves engaged in the following text and email exchanges which by all outward appearances would look like there was an agreement… 

Seller’s agent countered Buyer’s $3.1M offer stating, “Sellers would only accept the list price of $3.4 million.”   Next, Buyer’s Agent accepted stating, “Buyer would meet Seller’s $3.4M with all other terms remaining the same and a quick cash close, please have the Seller counter the offer on our contract at $3.4M, sign and return and I will get you the contract fully executed today.”  The Sellers’ agent texted back, “Sellers accept the $3.4 million and ask to close 2/1/21.”  Buyer’s agent texted, “Perfect and confirmed.  Thank you!”  Seller’s agent reiterated by email, “Seller thanks [buyer] for his patience and accepts $3.4 million.” 

Having seller’s remorse, Seller hired an attorney who advised the Buyer’s agent that, “Seller accepted a different offer.”  Buyer promptly sued Seller for specific performance, Seller moved to dismiss Buyer’s lawsuit arguing a contract was never formed since the agreement was never “executed,” the trial court agreed with Seller, and the appellate court upheld the decision.   

Court’s Legal Analysis.  In upholding the dismissal of Buyer’s lawsuit, the court found the Buyer’s offer never matured into a contract and therefore was unenforceable for three (3) reasons. 

First, the appellate court succinctly summarized: there was an initial offer signed by the Buyer, and then only unsigned text messages and emails exchanged between both buyer’s and sellers’ real estate agents.  However, “in the present case there was no written agreement signed by both parties as required by the statute of frauds.” 

The “statute of frauds” is an old law which can be traced back to 1677 England.  Florida Chapter 725 is entitled “unenforceable contracts.”  Florida’s version of the Statute of Frauds states in relevant part:

No action shall be brought . . . upon any contract for the sale of lands . . . unless the agreement or promise … shall be in writing and signed by the party to be charged therewith or by some other person by her or him thereunto lawfully authorized.”

Fla. Stat. §725.01.  

Second, the court examined the terms of Buyer’s offer, which was written on the standard FAR/BAR As-Is Purchase and Sales Agreement.  Based upon the terms of Buyer’s very offer, which set “[t]he effective date [as] … the date when the last one of the Buyer and Seller has signed or initialed and delivered this offer or final counter-offer” the court found it dispositive that Seller never signed the initial offer.  Therefore, since the Seller never counter-signed Buyer’s offer, there was no real estate contract.

Third, the court held that the statute of frauds must be strictly construed and requires not only that (1) “the contract must be a writing signed by the party against whom enforcement is sought,” but also (2) “the writing must contain all of the essential terms of the sale and these terms may not be explained by resort to parol evidence.” Parol evidence meaning oral, verbal, or extraneous evidence.  In this case, neither party signed modifications to the essential terms such as the “price” change from $3.1M to $3.4M, nor the “closing date” change from 01/19 to 02/01.

What Constitutes a “Signed” writing for Purposes of a Real Estate Contract?  So by way of further analysis, if a real estate contract must be a writing signed by the party against whom enforcement is sought, then what constitutes a “signed” writing?  According to the above case, the texts and emails exchanged by the parties’ realtors were insufficient. 

Well the answer as to what types of signatures may be acceptable can be found in paragraph O of the FAR/BAR, which allows the use of “electronic signatures” recognized by both “Florida’s Electronic Signature Act, and other applicable laws.” 

O. CONTRACT NOT RECORDABLE; PERSONS BOUND; NOTICE; DELIVERY; COPIES; CONTRACT EXECUTION: … A facsimile or electronic copy of this Contract and any signatures hereon shall be considered for all purposes as an original. This Contract may be executed by use of electronic signatures, as determined by Florida’s Electronic Signature Act and other applicable laws.”   See, Florida Realtors/FloridaBar-ASIS-6 Rev.10/21 © 2021 Florida Realtors”‘ and The Florida Bar.

What Constitutes an “Electronic Signature” for Purposes of a Real Estate Contract?  Florida appears to treat electronic signatures and physical signatures equally.  Florida Chapter 668 broadly deals with Electronic Commerce which is further broken down into Part I “Electronic Signatures”, and Part II “Electronic Transactions.”

Part I of Chapter 668, is known as Florida’s Electronic Signature Act of 1996, and states, “Unless otherwise provided by law, an electronic signature may be used to sign a writing and shall have the same force and effect as a written signature.”  Fla. Stat. §668.004.     An “ ‘ Electronic signature’  means any letters, characters, or symbols, manifested by electronic or similar means, executed or adopted by a party with an intent to authenticate a writing. A writing is electronically signed if an electronic signature is logically associated with such writing.”  Fla. Stat. §668.003(4)

Part II of Chapter 668, is known as “Florida’s Uniform Electronic Transaction Act”  and states in relevant part,  

A record or signature may not be denied legal effect or enforceability solely because the record or signature is in electronic form. A contract may not be denied legal effect or enforceability solely because an electronic record was used in the formation of the contract. If a provision of law requires a record to be in writing, an electronic record satisfies such provision.  If a provision of law requires a signature, an electronic signature satisfies such provision.  Fla. Stat. §668.50(7).   An Electronic Signature means an electronic (“Electronic” means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities) sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record. Fla. Stat. §668.50(1)(e),(h).

Signatures for “MODIFICATIONS” vs. Methods of providing “NOTICES” in the FAR/BAR.  Although the above case did not mention it, both the current and the prior version of the FAR/BAR Purchase Contract have what is called an integration clause.  An integration clause (also called a merger clause) is generally a clause inserted usually at the end of a written contract that closes the contract by stating this written contract is the complete and final agreement and understanding between the parties and any and all prior or contemporaneous agreements or representations are merged into this written agreement.  However, an integration clause also typically leaves an opening explaining the method the parties must use to modify that agreement.  According to Paragraph “P” of the FAR/BAR contract, entitled,

“ P. INTEGRATION; MODIFICATION: This Contract contains the full and complete understanding and agreement of Buyer and Seller with respect to the transaction contemplated by this Contract and no prior agreements or representations shall be binding upon Buyer or Seller unless included in this Contract. No modification to or change in this Contract shall be valid or binding upon Buyer or Seller unless in writing and executed by the parties intended to be bound by it.”

So in other words, according to the FAR/BAR Contract, it appears as though changes, modifications, variations, and alterations to the FAR/BAR have to be both in writing and executed (i.e. signed). 

Does the 2021 FAR/BAR allow Texting at All?   The prior 2017 version of the FAR/BAR allowed notice by any “electronic media,” however in 2021 the ability to use any electronic media was deleted.  Instead, of allowing notice by electronic media, that phrase was replaced with allowing notice to be given by “email.”  Moreover, the 2021 and the 2017 FAR/BAR requires that its terms be strictly construed.  Paragraph O states that “notices … may only be made by….” and then lists the only methods that may be used.  Both the plain reading and strict construction of the 2021 FAR/BAR, coupled with 2021’s more restrictive language on how notice may be given, seems to all militate against the use of any texting whatsoever for providing notice. 

Both the 2021 and 2017 versions of FAR/BAR Paragraph O, are reprinted below for ease of reference with the subtle difference underlined and bolded: 

2021 VERSION:       “ O. CONTRACT NOT RECORDABLE; PERSONS BOUND; NOTICE; DELIVERY; COPIES; CONTRACT EXECUTION: … Notice and delivery given by or to the attorney or broker (including such broker’s real estate licensee) representing any party shall be as effective as if given by or to that party. All notices must be in writing and may only be made by mail, facsimile transmission, personal delivery or email. A facsimile or electronic copy of this Contract and any signatures hereon shall be considered for all purposes as an original. This Contract may be executed by use of electronic signatures, as determined by Florida’s Electronic Signature Act and other applicable laws.”  See, Florida Realtors/FloridaBar-ASIS-6 Rev.10/21 © 2021 Florida Realtors and The Florida Bar©.

2017 VERSION:            O. CONTRACT NOT RECORDABLE; PERSONS BOUND; NOTICE; DELIVERY; COPIES; CONTRACT EXECUTION: … Notice and delivery given by or to the attorney or broker (including such broker’s real estate licensee) representing any party shall be as effective as if given by or to that party. All notices must be in writing and may be made by mail, personal delivery or electronic (including “pdf”) media. A facsimile or electronic (including “pdf”) copy of this Contract and any signatures hereon shall be considered for all purposes as an original. This Contract may be executed by use of electronic signatures, as determined by Florida’s Electronic Signature Act and other applicable laws. See, Florida Realtors/FloridaBar-ASIS-6 Rev.06/19 © 2017 Florida Realtors and The Florida Bar©.

The drafters of the 2021 FARB/BAR knew texting existed in 2021, and in fact, cellphones are the lifeblood for most realtors, who are not sitting at desks using email.  Of course, as a counter-point, there is no reason why a realtor couldn’t simply send the same correspondence from their cellphone using an email app instead of a text.   Perhaps the reasoning relates to emails being more reliable, having better storage, and being capable of being authenticated.  

When Does the FAR/BAR Require “Notices” to be Given?   The 2021 FAR/BAR speaks about delivering written notice relating to: (1) A buyer wanting to  cancel due to a lease or landlord/tenant estoppel concerning the property {line 77, 419}; (2) Buyer obtaining loan approval {line 111}; (3) Buyer’s ability to obtain loan approval {line 114}; (4) Buyer cancelling due to inability to obtain loan approval {line 117}; (5) Seller’s ability to cancel if buyer is unable to get loan approval {line 123}; (6) Buyer’s cancellation relating to flood insurance {line 225};  (7) Buyer’s cancellation during its inspection period {line 265}; (8) Buyer’s receipt of a title commitment and then notifying seller of title defects rendering title unmarketable {line 386, 483}; (9) Seller having cured the title defects {line 392}; (10) If Seller cannot cure a title defect {line 395}; (11) If a survey discloses encroachments; (12) A parties desire to cancel due to a force majeure {line 451}; (13) Seller providing utilities and access for appraisers, inspection, and walk-throughs {line 509}; and (14) FIRPTA {line 568}. 

So in Conclusion, with regards to how the parties to a real estate transaction should communicate it appears as though: (1) to establish a real estate contract, the contract needs to be in writing and signed by the parties; (2) to modify a real estate contract after it is properly formed, the modification needs to be in writing and signed by the parties intended to be bound; and (3) to give notices under the 2021 FAR/BAR real estate contract, notices must be in writing and may only be made by mail, facsimile transmission, personal delivery or email.

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 in the Metaverse

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”

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.


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 PolicyPremium 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 PolicyPremium 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.