Bar News - May 18, 2016
Real Property Law: What NH Lawyers Should Know About Florida Real Estate
By: Norman J. Silber
Many permanent residents of New Hampshire often also own real estate in Florida, whether a vacation home, a condominium, or a timeshare. If the New Hampshire resident dies while owning Florida real property titled in his or her name alone, an ancillary probate administration of some type (full or abbreviated) will likely be required in order for title to that property to be transferred to the proper estate beneficiaries.
The simplest way to avoid the necessity of an ancillary probate proceeding in Florida is for the New Hampshire resident to convey the Florida property to a trust, either, typically, an existing revocable inter vivos trust or a special land trust established to hold title.
Florida real estate practices are often quite different than those in New Hampshire. For example, Florida deeds from individuals require two witnesses and an acknowledgment, and the marital status of grantors (but not grantees) on deeds needs to be stated. If the grantor on a deed to Florida property is married, the spouse must either join in the deed or there must be a suitable non-homestead recitation in the deed itself.
Recordation & Taxation
Florida is a race/notice state – first-in-time recorded is first-in-right against competing bona fide purchasers. The general requirements for recording deeds and mortgages are contained in Florida Statute (FS) Section 695.26. Recording costs are nominal, but documentary excise tax and state intangible tax on secured transactions can be significant. Documentary excise tax on deeds transferring Florida real estate into a trust for purposes of avoiding ancillary probate is usually nominal ($0.70 in all counties except Miami-Dade, in which it is $1.05). The nature of the trust has a bearing on the tax imposed. Ordinary conveyances of Florida real estate can incur substantial documentary excise tax based on the consideration for the conveyance.
Statute of Frauds
In addition to its typical UCC Statute of Frauds, Florida has a real estate Statute of Frauds (FS 689.01): Deeds and leases for more than one year require execution of a written instrument in the presence of two subscribing witnesses.
General Warranty Deed
This is the only type of deed for which specific format of language, in permissive form, is specified in a statute (FS 689.02). A statutory warranty deed in Florida is the usual and customary form of deed and, if statutory language is used, the usual common law covenants are included.
Limited or Special
Typical language follows form of general warranty deed but limits the last covenant (that grantor will warrant and defend title) from usual form in a general warranty deed (“against all persons whomsoever”) to “against all persons whomsoever claiming by, through or under grantor, but not otherwise.”
Deed in Trust
Deed in trust to trustee of an unrecorded trust under FS 689.071 should contain the magic words conferring on the named grantee/trustee “the power and authority either to protect, conserve and to sell, or to lease, or to encumber, or otherwise to manage and dispose of the real property described in the recorded instrument.” Otherwise, conveyance to grantee identified as “trustee” or “as trustee” and without naming the beneficiaries or the nature and purposes of the trust vests both legal and equitable title in the grantee free of trust.
Mortgages, not deeds of trust are used. Florida is a lien state, not a title state, no matter what a mortgage or “mortgage deed” might say. Florida mortgages must be foreclosed by a civil action in the Circuit Court for the county in which the property is located. Powers of sale contained in mortgages are not enforceable in Florida. Deficiency judgments after foreclosure and sale are generally available. Confessions of judgment in any instrument are unenforceable in Florida as being against public policy.
Scrivener’s Disclosure & Liability. All instruments affecting real property in Florida must contain the name and address of the person preparing the instrument. FS 697.10 provides that in any action relating to real property, if the court shall find that any person has prepared an instrument, which due to an inaccurate or improper legal description impairs another person’s title to real property, the court may award to the prevailing party all costs incurred by her or him in such action, including reasonable attorney’s fees, and may award to the prevailing party all actual damages that may have been sustained as a result of such impairment of title.
A tenancy in common is the default, in absence of specific language to the contrary. A joint tenancy with full rights of survivorship is recognized if clearly specified in the instrument. Any conveyance of real estate to a husband and wife (whether or not recited in the instrument as husband and wife) is deemed to create a tenancy by the entireties unless a contrary intention appears on the instrument. A tenancy by entireties can be only between husband and wife, and the tenancy automatically converts to a tenancy in common upon dissolution of marriage. Death of one of the tenants in a tenancy by the entireties vests legal title in the surviving spouse, but proof of death and absence of any estate tax lien must be placed of record.
If after all of this, you still end up with a New Hampshire decedent owning real estate in Florida is his or her own name, an ancillary probate proceeding itself is not terribly onerous and can be usually done ex parte (obviously if not contested) by e-filing (compulsory), especially if you have the software for the Bar-approved forms.
Norman J. Silber is an attorney in Gilford. He practiced law in Miami for 40 years before moving permanently to New Hampshire in 2012. Contact him for any more information about this or related topics by email.